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Stocks Can't Find Juice

A selloff in energy shares leads the major averages lower.

Updated from 4:08 p.m. EST

Stocks finished lower Tuesday as a sharp drop in oil prices sent energy shares reeling.

The

Dow Jones Industrial Average

lost 48.51 points, or 0.45%, to 10,749.76. Leading to the downside was

Alcoa

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with a 3.6% drop.

Exxon Mobil

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lost 2.3%, and

Caterpillar

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fell 2.2%.

General Motors

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was also a drag, falling 2.3% after announcing a 50% dividend reduction.

The

S&P 500

was down 10.24 points, or 0.81%, at 1254.78, and the

Nasdaq Composite

shed 13.84 points, or 0.61%, at 2244.96.

"This is a continuation of last week's decline, and it's picking up in intensity," said Barry Hyman, equity market strategist with Ehrenkrantz King Nussbaum. "There is little rotation as we see the commodity complexes taking a huge hit. It looks worse than it actually is, but still it will require a lot of work technically to right the damage."

About 1.73 billion shares changed hands on the

New York Stock Exchange

. Volume on the Nasdaq was 2.15 billion shares. Decliners outpaced advancers 2 to 1.

The 10-year Treasury bond was down 5/32 in price to yield 4.57%, while the dollar fell against the yen and euro.

Oil dropped as traders turned their attention to Wednesday's inventory report, which is expected to show gains in crude and gasoline stocks. March crude finished down $2.02 to $63.09 a barrel, its lowest close of 2006.

The steep decline in crude had the Philadelphia Oil Service Sector index falling 6.1% and the Amex Oil index down 3.4%.

"Without interest rates, oil, earnings or economics moving the market, one should focus on the short-term technicals," said Marc Pado, market strategist with Cantor Fitzgerald. "The Dow, which had underperformed on the way up, is giving up ground grudgingly. One should look at this pullback phase as a healthy correction of the October-to-January run."

GM was one of the top stories of the day, saying it would cut its dividend in half and put a limit on its contribution to the health care benefits of salaried retirees. GM has been facing concerns about its liquidity for months.

Shares of GM fell 53 cents to $22.81.

To view Gregg Greenberg's video take on today's market, click here

.

Homebuilders also fell, led by Toll Brothers, which reported a 35% rise in revenue to about $1.33 billion and said its backlog rose 21% to almost $6 billion. But Toll also said first-quarter contracts slipped 21% from a year ago and warned that 2006 deliveries will be 9,200 to 9,900 homes, down from its old estimate of 9,500 to 10,200.

"Selling homes this first quarter was certainly more difficult than one year ago; we faced a particularly challenging comparison to last year, as signed contracts in FY 2005 rose 60% vs. FY 2004," Toll said. "We experienced softening demand, to varying degrees, in a number of markets and continue to be constrained by long delivery times at many of our communities."

Shares of Toll finished down $1.73, or 5.5%, to $29.47. The loss dropped the Philadelphia Housing Sector index by 2.1%.

Activision tanked after saying third-quarter earnings fell 30% from a year ago to $67.9 million, or 23 cents a share, as promotional costs ate up a 20% sales increase. Analysts had been expecting 36 cents a share from the video-game maker.

Looking forward, Activision predicted "weaker-than-expected market conditions." In its current, fourth quarter, the company now expects to lose 7 cents to 9 cents a share on sales ranging from $125 million to $135 million. Wall Street had predicted that Activision would earn 2 cents a share in the current period on sales of $198.3 million. Activision lost 61 cents, or 5.6%, to $13.56.

In other earnings,

Yum! Brands

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said fourth-quarter earnings fell to $226 million, or 77 cents a share, from the $235 million, or 77 cents, from last year. Revenue rose 4% to $2.9 billion from a year ago. The Thomson First Call consensus was for 78 cents a share on revenue of $2.96 billion. Shares were off 61 cents, or 1.2%, to $50.56.

Boston Scientific

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posted fourth-quarter net income of $334 million, or 40 cents a share, up from $297 million, or 35 cents a share, from a year ago. Excluding items, the company earned 41 cents a share, a penny below the Thomson First Call consensus. Sales fell to $1.54 billion from $1.6 billion last year, also below estimates.

Boston Scientific, which also said it plans to complete its acquisition of

Guidant

(GDT)

by the end of the first quarter, was higher by 64 cents, or 3%, to close at $22.26.

Dow component

Coca-Cola

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said fourth-quarter net income fell 28% from a year ago to $844 million, or 36 cents a share, reflecting a tax charge on overseas earnings. Adjusted earnings were 2 cents ahead of estimates. Coca-Cola gained 9 cents, or 0.2%, to $41.03.

Barr Pharmaceuticals

(BRL)

said its second-quarter earnings rose 60% from a year ago, while revenue jumped 26% to $326 million. Adjusted earnings of 85 cents a share were 7 cents ahead of estimates. Barr closed up $1.20, or 1.8%, to $68.70.

Internet retailer

Overstock.com

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said fourth-quarter revenue rose 44% from a year ago to $318 million, below the Thomson First Call average consensus of $337.9 million. The company declined to offer fourth-quarter EPS data, saying it was "working through with our auditors" some accounting matters. Overstock surged $1.53, or 6.7%, to $24.28.

After the bell Monday,

Disney

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said it had fourth-quarter earnings of $734 million, or 37 cents a share, up from $686 million, or 33 cents a share, a year ago. Excluding items, Disney earned 35 cents a share, beating the Thomson First Call by a nickel. Revenue rose 2.2% to $8.85 billion from a year ago, also beating estimates.

Disney also confirmed that it will merge its ABC Radio Network with

Citadel Broadcasting

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in a deal worth $2.7 billion. Disney shares added $1.74, or 7%, to $26.70.

After Tuesday's close

Cisco

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said second-quarter earnings totaled $1.38 billion, or 22 cents a share, compared with $1.4 billion, or 21 cents a share, a year earlier. Excluding items, Cisco earned 26 cents a share, beating the Thomson First Call estimate by a penny. Sales rose to $6.63 billion, also ahead of estimates. Cisco finished the session up 26 cents, or 1.5%, to $18.09.

Shares of

JetBlue

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sank the Amex Airline index for a second straight day after Morgan Stanley downgraded the airline to underweight from equal weight, citing concerns over competition and rising expenses. JetBlue lost 4.3%, dragging the index down 0.9%.

Apple Computer

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finished higher after the company introduced new lower-priced tiers for the iPod Shuffle and nano MP3 players. The stock gained 30 cents, or 0.5%, to $67.60.

Stocks were mixed in light trading on Monday as investors groped for catalysts as earnings season wound down. The Dow added 5 points, or 0.04%, to 10,798, while the S&P 500 gained 0.99 of a point, or 0.08%, to 1265.02, and the Nasdaq lost 4 points, or 0.2%, to 2258.80.

Overseas markets were lower, with London's FTSE 100 down 0.6% to 5741 and Germany's Xetra DAX unchanged at 5668. In Asia, Japan's Nikkei fell 0.2% overnight to 16,721, while Hong Kong's Hang Seng lost 0.2% to 15,517.