Stocks Surrender Their Gains
09/02/08 - 03:12 PM EDT
Mike Taylor
Updated from 2:25 p.m. EDT
Stocks in New York reversed early gains to dip into the red Tuesday afternoon after Hurricane Gustav failed to cause major oil-supply disruptions, sending crude prices much lower. The Dow Jones Industrial Average, up as much as 230 points earlier, was recently down 62 points to 11,482, and the S&P 500 was down 9.4 points to 1273. The Nasdaq gave back 27 points to 2341. Even as stocks in the financial and consumer-goods sectors were advancing while oil prices fell, minerals and oil-related companies were getting hit, causing the major indices to jerk closer to the baseline. While Dow members Bank of America (BAC Quote - Cramer on BAC - Stock Picks) and General Motors (GM Quote - Cramer on GM - Stock Picks) were each jumping more than 3%, Chevron (CVX Quote - Cramer on CVX - Stock Picks) and Alcoa (AA Quote - Cramer on AA - Stock Picks) were down 3% and 5.9%, respectively. Tony Dwyer, equity market strategist at FTN Midwest Securities, said that the release of minutes to the Federal Reserve's Aug. 5 Federal Open Market Committee meeting suggested that three of the Fed districts requested an increase in the target interest rate. "I guess the market didn't like that so much," he said. Dwyer also pointed out that volume was low, and that energy stocks have dragged down the indices. "It's kind of hard to maintain strong momentum when a sector that makes up 13% of the market cap is down 5%." He added that intraday volatility from mid-August through today has been enormous. The price of crude oil plummeted $5.75 to settle at $109.71, after Gustav hit the Louisiana coast but largely spared New Orleans and energy-production facilities in the area. Gold dropped $24.70 to $810.50.
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