Stocks pull back amid Middle East tensions
NEW YORK -- Wall Street retreated today on concerns that Israel's attack on Gaza might disrupt oil production and shipments from the Middle East, driving oil prices higher.
Investors remained cautious in a holiday-shortened week, unwilling to make many big bets in the final three days of trading for 2008. Israel's escalating attacks against Gaza's Hamas rulers made traders more hesitant to buy.
The tensions pushed oil prices above $40 a barrel during the session, though crude was up just 29 cents at $39 a barrel on the New York Mercantile Exchange at midday. Oil has fallen more than $100 from its peak of $147.27 a barrel on July 11 as a slowing economy curbed demand.
Todd Leone, managing director of equity trading at Cowen & Co., said volume is extremely light and that is contributing to the market's swings. Low volume tends to skew price movements.
"What's going on in Israel didn't read well over the weekend," Leone said. "Beyond that, it is an incredibly quiet session. It's really not taking much to move the markets."
Investors also digested a potential blow to dealmaking on Wall Street. On Sunday, Kuwait's government canceled its $17.4 billion K-Dow Petrochemicals joint venture with Dow Chemical Co., saying it was "very risky" because of the global financial crisis and low oil prices. The joint venture was set to begin Thursday.
Rohm & Haas Co. maintains that its proposed $15.3 billion takeover by Dow Chemical won't be affected by Dow's substantial loss of income from the venture. But investors punished shares, driving them down 19.3 percent, or $12.27, to $51.47. Dow Chemical shares lost $3.89, or 21 percent, to $15.03.
In midday trading, the Dow Jones industrial average fell 83.71, or 0.98 percent, to 8,431.84.
Broader indexes also declined. The Standard & Poor's 500 index fell 10.39, or 1.19 percent, to 862.41; the Nasdaq composite index fell 27.12, or 1.77 percent, to 1,503.12.
Declining issues were ahead of advancers by nearly 2 to 1 on the New York Stock Exchange, where volume came to 253.4 million shares.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.09 percent from 2.14 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.02 percent from 0.01 percent late Friday.
The dollar was lower against other major currencies, while gold prices edged higher.
