DECEMBER 2, 2009
Stocks turned lower as bearish analyst comments hurt bank shares, and a slide in oil prices dented shares of energy producers.
The Dow Jones Industrial Average recently was off 36 points, or 0.3%, at 10436. Financials were the Dow's weakest components with J.P. Morgan Chase, American Express, and Bank of America off more than 1% each. The Wall Street Journal reported that two chief executive candidates said Bank of America should consider breaking itself up, though the board has rejected that idea.
Also weighing on banks, UBS analysts predicted that capital markets' seasonal slowing could come earlier this year, and cut their fourth-quarter earnings target for Morgan Stanley, J.P. Morgan, Bank of New York Mellon and others. In addition, Sanford C. Bernstein said J.P. Morgan could face a revenue decline of as much as $3 billion under a "worst case" scenario for derivatives legislation.
Technology shares were a relative bright spot, helping the Nasdaq Composite Index to scratch out a 0.2% gain. But the S&P 500 was off 0.2% to 1107, led by a 1% decline in its energy sector following the release of data showing surprisingly robust U.S. reserves of oil.
Crude futures were recently down $1.99 to $76.38 a barrel on the New York Mercantile Exchange.
The Dow reached a new 14-month closing high on Tuesday as fears over a default of billions of debt in Dubai subsided and investors moved back toward riskier investments. Some of that movement reversed Wednesday, though traders said the move hasn't been accompanied by sufficient volume to confirm that a new downtrend is underway.
"It would be good to see us break into a new trading range, but that's been difficult to do," said Don Bright, a partner at the proprietary firm Bright Trading in Chicago. "Barring any big news, like another Dubai type of development, that may continue to be the case through the end of the year."
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