Stocks Pull Back; Gold in Rally Mode
NEW YORK (
) -- Stocks sold off Tuesday for the second consecutive trading session as investors hesitated to push equities beyond last week's two-year highs. Meanwhile, gold rallied despite a stronger dollar as investors worried further quantitative easing will lead to inflation.
The Dow closed down 60 points, or 0.5%, at 11,347. The
S&P 500
shed 0.8%, or 10 points, to finish at 1213, and the
Nasdaq
slipped 17 points, or 0.6%, to settle at 2562.
The basic materials sector displayed some signs of strength early but weakened in the latter half of the session.
Exxon Mobil
(XOM) - Get Report
,
Microsoft
(MSFT) - Get Report
,
Wal-Mart
(WMT) - Get Report
and
Coca-Cola
(KO) - Get Report
were the only gainers on the Dow.
Bank of America
(BAC) - Get Report
,
Alcoa
(AA) - Get Report
and
DuPont
(DD) - Get Report
were the worst performers among Dow components.
Gold continued its rise after breaking through $1,400 for the first time on Monday. The
Fed's
decision to pour money into the U.S. economy has increased inflation concerns. The December gold contract surged $6.90 to $1,410 an ounce. The December crude oil contract shed 34 cents to trade at $86.72 a barrel, after making a fresh two-year high at $87.63 earlier in the morning.
Shares of
Atlas Energy
(ATLS)
were up 34% to close at $42.50 on news that
Chevron
(CVX) - Get Report
agreed to buy the natural gas producer for $4.3 billion in cash and stock.
Energy stocks rallied on the M&A buzz.
Cabot Oil and Gas
(COG) - Get Report
,
Range Resources
(RRC) - Get Report
and
Consol Energy
(CNX) - Get Report
surged 4%, 4.5% and 2% respectively.
Also,
Sara Lee
(SLE)
announced plans to sell its bread unit to a Mexican bakery giant
Grupo Bimbo
for $959 million. The stock is up 2.7% at $15.17.
Peter Cardillo, chief market economist at Avalon Partners, said some of the weakness may be related to how well equities have done of lately, but he remains bullish.
"There was a little bit of a pullback yesterday after stocks hit two-year highs, and there's a little hesitation ahead of the G20 and in the absence of data, but I think this market is in the midst of a strong year-end rally," he said.
"As economic numbers get more plentiful next week, the market will begin to react to a market that's improving. Of course with QE2, there's no place to put your money, so it's floating into equities."
The Commerce Department said wholesale inventories grew 1.5% in September, exceeding the 0.6% increase that the market had expected, according to Briefing.com. September's growth compares to August's 1.2%, which was upwardly revised from an originally reported uptick of 0.8%.
|
Bank of America and
PNC Financial Services
(PNC) - Get Report
could make a combined profit of $8.32 billion from the sale of
BlackRock
(BLK) - Get Report
shares completed in a secondary offering.
Late Monday, BlackRock priced 51.1 million shares at $163 a share. Bank of America plans to sell 43.5 million shares -- or 9 million more than originally planned -- while PNC offered the expected 7.5 million shares. BlackRock's stock fell 2.7% to $164.51. Shares of Bank of America were off by 2.6% to $12.27, and PNC's stock was down by 2.4% at $56.25.
Priceline.com
(PCLN)
saw its stock gain 8.2% to close at $420.65 after it topped profit expectations and issued better-than-expected fourth-quarter earnings and revenue guidance.
Shares of
Dean Foods
(DF) - Get Report
were down 18% to $8.50 after the company missed profit expectations with earnings of 13 cents a share. The company also said its chief financial officer, Jack Callahan, will resign to accept a similar position at another publicly traded company. Shaun Mara, the company's current senior vice president and chief accounting officer, will succeed Callahan.
Level 3 Communications
(LVLT)
soared 18.6% to $1.05 on speculation that it had won a contract with
Netflix
(NFLX) - Get Report
at the expense of
Akamai Technologies
(AKAM) - Get Report
. Akamai denied any problems with Netflix. Shares of Akamai were down 4.7% at $51.56.
Global professional services firm
Marsh & McLennan
(MMC) - Get Report
missed consensus estimates by a penny with adjusted earnings of 27 cents a share. Revenue rose to $2.5 million from $2.4 million a year ago. The stock was down by 3.2% at $25.16.
Alibaba
founder Jack Ma was reportedly approached by a private equity group to see if he was interested in joining a bid to buy
Yahoo!
(YHOO)
, according to
Reuters
. Shares of Yahoo! were up 3.2% to $16.97.
Shares of
AK Steel
(AKS) - Get Report
shed 5.1% to $13.24 after Goldman Sachs downgraded the stock to neutral from buy.
Goldman Sachs
(GS) - Get Report
will pay a $650,000 fine for failing to promptly disclose that two of its registered representatives were being investigated by the
Securities and Exchange Commission.
The stock is down 1.6% at $166.49.
After the closing bell,
MBIA
(MBI) - Get Report
said it narrowed losses for the third quarter to $1.06 per share, lower than analyst expectations for 58 cents. The stock was falling 2% in aftermarket trading.
Tesla Motors
(TSLA) - Get Report
reported an adjusted loss of 37 cents per share, beating estimates by 5 cents. Shares were off slightly in aftermarket trading at $24.60.
The dollar traded higher against a basket of currencies. The dollar index strengthened by 0.8%, and the benchmark 10-year Treasury note weakened 29/32, lifting the yield to 2.663%.
European shares rose after
Barclays
(BCS) - Get Report
said in an interim management statement that its overall impairment charge and loan-loss ratio continued to improve in the third quarter. British mobile communications company
Vodafone
(VOD) - Get Report
also issued strong results. The FTSE in London gained 0.4% and the DAX in Frankfurt finished higher by 0.5%.
In Asia, markets declined. Hong Kong's Hang Seng fell 1% amid concerns about possible monetary policy changes to limit excess liquidity. Japan's Nikkei declined by 0.4%.
--Written by Melinda Peer and Shanthi Venkataraman in New York
.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
