Stocks decline as oil prices creep higher
NEW YORK -- The stock market sank Wednesday, as investors found little encouragement in the day's economic data and watched oil prices climb further into record territory.
Even after the Energy Department said both crude and gasoline inventories in the United States increased last week, crude prices reached a new high of $122.81 a barrel on the New York Mercantile Exchange, then pulled back to fluctuate around the $122 level.
Inflation has been a burgeoning concern lately. Oil prices have doubled over the past year, causing gasoline prices to surge further into record terrain and strap debt-laden U.S. consumers with yet another financial burden. Kansas City Federal Reserve President Thomas Hoenig in a speech late Tuesday cited inflation as his main worry.
Wall Street did get a dose of good news when the Labor Department said labor costs rose at an annual rate of 2.2 percent during the first quarter. That's down from a 2.8 percent rise the previous quarter, suggesting that inflation pressures may be letting up.
But overall, there has not been enough strong data lately to give investors the nudge they need to push the Dow Jones industrial average back above the four-month highs it reached last week. Market analyst Edward Yardeni noted that the Dow, the Standard & Poor's 500 index and many key individual stocks are close to their 200-day moving averages.
"Not everybody's a fan of technical analysis, but everyone knows that this is an important technical level," Yardeni said. "We need some really good bullish news to break above that average."
The Dow fell 57.81, or 0.44 percent, to 12,963.02, after fluctuating in earlier trading.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 6.77, or 0.48 percent, to 1,411.49, and the Nasdaq composite index fell 7.61, or 0.31 percent, to 2,475.70.
Bond prices edged lower. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.93 percent from 3.92 percent late Tuesday.
Gold prices fell, while the dollar rebounded against other major global currencies.
The economic picture remains mixed. The National Association of Realtors said Wednesday that pending sales of existing homes fell in March by 1 percent, more than many economists predicted. Weak housing data hardly comes as a surprise to investors, but bolsters the argument that even if the economy turns around later in the year, the housing market will take a long time to recover.
In corporate news, Clearwire and Sprint Nextel Corp. said they are planning to merge their wireless broadband units to create a new $14.55 billion wireless communications company. The new company is getting a $3.2 billion investment from Intel Corp., Google Inc., Comcast Corp., Time Warner Cable Inc. and Bright House Networks.
Clearwire rose 16 cents to $16.62 and Sprint rose 5 cents to $9.25.
In earnings news, The Walt Disney Co. reported late Tuesday that profit in the most recent quarter rose 22 percent despite the Hollywood writers' strike. Disney was the biggest gainer among the 30 Dow components, rising 99 cents, or 2.9 percent, to $34.74.
Yardeni noted that while the first-quarter earnings season began several weeks ago with worse-than-expected results from General Electric Co., it ended up bringing decent results, with earnings excluding the financial sector rising close to 10 percent.
"There is a perception in the markets we had a great move here since March, and that we need to take a break from the rally for a while," Yardeni said. "And then we'll be set up for a summer rally."
The Russell 2000 index fell 1.13, or 0.15 percent, to 728.66.
Declining issues outnumbered advancers by about 4 to 3 on the New York Stock Exchange, where volume came to 514.5 million shares.
Overseas, Japan's stock market rose 0.38 percent. Britain's FTSE index rose 0.74 percent, Germany's DAX index rose 1.16 percent, and France's CAC-40 rose 0.68 percent.