Stocks Crumple Under Oil Prices

All three major indices are losing ground as traders deal with mixed corporate news and another record day for oil. AMR reports it will cut flights and staff capacity, and Time Warner announces it will spin off its cable division.
By Sarina Penn ,

Updated from 9:43 a.m. EDT

Stocks in the U.S. were slipping early Wednesday as traders digested mixed news on the corporate front and another new high for oil.

The

Dow Jones Industrial Average

started off higher, but recently sank 67 points to 12,761. The

S&P 500

was down 2 points at 1412 following some erratic trading around the flat line, and the

Nasdaq Composite

was edging down 1 point to 2491.

That came as the newly benchmarked July crude contract got past $131 a barrel for the first time. Oil futures were climbing from the outset, then shot even higher after the government's weekly crude-stockpile report showed a decline of 5.4 million barrels. Recently, crude was up $2.83 at $131.81.

Gold futures were tacking on $1.10 to $921.30 an once. The U.S. dollar had another weak day, losing 0.6% to the euro at $1.5766 and softening by 0.3% against the yen at 103.28.

On the corporate front, after the market's prior close, Dow component

Hewlett-Packard

(HPQ) - Get Report

confirmed that fiscal second-quarter earnings

climbed 16%

to $2.1 billion on rising revenue of $28.3 billion. The results were in line with what the computer maker announced last week, when the company simultaneously said it had

agreed to buy

EDS

(EDS)

for $13.9 billion.

H-P shares were down 2.4%.

Meanwhile, TurboTax software maker

Intuit

(INTU) - Get Report

topped Wall Street estimates

with adjusted earnings of $1.39 a share. Revenue jumped 15%, and the company issued in-line guidance for the current quarter. Shares tracked 5.4% higher.

Another tech name,

Analog Devices

(ADI) - Get Report

, booked a climbing profit for last quarter and set out bullish guidance for the next, but the chipmaker's gross margin was also down slightly from the prior quarter. The stock gave up 4.8%.

Separately,

Time Warner

(TWX)

said it will

spin off

its

Time Warner Cable

(TWC)

business. Shares were adding 1.3% and 4%, respectively.

American Airlines parent

AMR Corp.

(AMR)

tumbled 12.1% after saying it will

reduce domestic flights and staff capacity

by 11% to 12% in the fourth quarter, citing agonizing fuel costs and a tough macro environment overall.

Soleil downgraded AMR and United operator

UAL Corp.

(UAL) - Get Report

to sell while cutting

Continental

(CAL) - Get Report

to hold from buy, and Lehman Brothers sliced its price targets on all three. UAL shares fell 11.6%, and Continental lost 7.9%.

Lehman Brothers eased its price targets on several other airline stocks, as well, including

U.S. Airways

(LCC)

,

Northwest

(NWA)

,

Jetblue

(JBLU) - Get Report

, and

Delta

(DAL) - Get Report

. Shares of the companies shed between 2.1% and 9.6%.

Elsewhere, two days after

Staples

(SPLS)

launched a $4.3 billion (2.8 billion euros) hostile takeout bid for

Corporate Express

(CXP) - Get Report

, the latter agreed to buy France-based Lyreco for $2.71 billion (1.73 billion euros) in an attempt to fend off those efforts. Shares of Staples were down 2.8%.

As for economic data, this afternoon the

Federal Reserve

is scheduled to release minutes from its April 30 gathering, when the central bank cut the fed funds target rate by another quarter-point to 2% and implied that it may be finished with its months-long easing campaign.

Treasury prices were slipping. The 10-year note was off 9/32 in price to yield 3.81% and the 30-year bond lost 10/32 in price, yielding 4.55%.

The major overseas markets were mostly falling. In Asia, Tokyo's Nikkei 225 dropped 1.7% overnight, but the Hang Seng Index in Hong Kong added 1.2%. Among European bourses, London's FTSE 100 was rising 0.3%, but Germany's Xetra Dax surrendered 1.2%. The Paris Cac moved down 0.7%.

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