Stocks fall on inflation worry and oil sector
Fri May 12, 2006 1:29 PM ET
By Emily Chasan
NEW YORK (Reuters) - U.S. stocks slid on Friday as a pullback in crude oil prices hurt energy sector shares like Exxon Mobil Corp. and investors pushed the Nasdaq down over 1 percent after a week of disappointing profits and outlooks from technology companies.
Shares of travel Web site Expedia Inc. fell nearly 25 percent after a lower-than-expected earnings report, and graphics chip maker NVIDIA Corp. lost 6 percent after some analysts expressed concerns that its earnings performance didn't justify its stock price.
The morning's economic data failed to dispel investors' worries about rising inflation and higher interest rates, which led to the biggest decline for stocks in almost four months on Thursday.
The Dow Jones industrial average <.DJI> was down 93.65 points, or 0.81 percent, at 11,406.99. The Standard & Poor's 500 Index <.SPX> was down 11.72 points, or 0.90 percent, at 1,294.20. The Nasdaq Composite Index <.IXIC> was down 25.25 points, or 1.11 percent, 2247.45.
"There is some concern about these fears of inflation and the budget deficit and trade deficit," said Milton Ezrati, senior economic strategist at Lord Abbett & Co.
"Inflation causes rates to go up -- that's never good for the equity market and it erodes the value of all financial assets," he added.
Data on Friday showed the U.S. trade deficit narrowed unexpectedly to $62 billion in March from $65.64 billion in February. But the deficit is still very worrisome, Ezrati said.
U.S. import prices rose more than expected in April, the Labor Department said before the market's open, adding to inflation worries.
Shares of Exxon, the world's largest publicly traded oil company, lost 1.8 percent to $62.30 and ranked as the heaviest weight on the S&P 500. Exxon was among the biggest contributors to the Dow industrials' decline.
U.S. crude futures fell after the International Energy Agency said high prices were affecting usage and cut its demand growth forecast. Crude for June delivery was down $1.32, or almost 2 percent at $72 per barrel.
Fri May 12, 2006 1:29 PM ET
By Emily Chasan
NEW YORK (Reuters) - U.S. stocks slid on Friday as a pullback in crude oil prices hurt energy sector shares like Exxon Mobil Corp.
Shares of travel Web site Expedia Inc.
The morning's economic data failed to dispel investors' worries about rising inflation and higher interest rates, which led to the biggest decline for stocks in almost four months on Thursday.
The Dow Jones industrial average <.DJI> was down 93.65 points, or 0.81 percent, at 11,406.99. The Standard & Poor's 500 Index <.SPX> was down 11.72 points, or 0.90 percent, at 1,294.20. The Nasdaq Composite Index <.IXIC> was down 25.25 points, or 1.11 percent, 2247.45.
"There is some concern about these fears of inflation and the budget deficit and trade deficit," said Milton Ezrati, senior economic strategist at Lord Abbett & Co.
"Inflation causes rates to go up -- that's never good for the equity market and it erodes the value of all financial assets," he added.
Data on Friday showed the U.S. trade deficit narrowed unexpectedly to $62 billion in March from $65.64 billion in February. But the deficit is still very worrisome, Ezrati said.
U.S. import prices rose more than expected in April, the Labor Department said before the market's open, adding to inflation worries.
Shares of Exxon, the world's largest publicly traded oil company, lost 1.8 percent to $62.30 and ranked as the heaviest weight on the S&P 500. Exxon was among the biggest contributors to the Dow industrials' decline.
U.S. crude futures fell after the International Energy Agency said high prices were affecting usage and cut its demand growth forecast. Crude for June delivery
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