On Monday, the first day of the fourth quarter, the Dow gained nearly 192 points to close at 14,087.55 -- a new high and its first foray above the 14,000 level since mid-July, right before a credit market squeeze triggered a stock selloff. Traders believe investors, wary of big stock fluctuations before, took some cash off the table.
"The economy is soft, you have this big run up, and the fact is people are just taking some profit," said Scott Fullman, director of investment strategy for I. A. Englander & Co. "There's not a ton of news to trade on, and investors are also looking ahead to the unemployment report on Friday."
Energy and commodities companies were among the biggest drags on the Dow Jones industrial average as prices for oil and gold continued to weaken in the futures markets. This dimmed the outlook for third-quarter earnings for the likes of Exxon Mobil Corp. and others, Fullman said.
In mid afternoon trading, the Dow fell 42.60, or 0.30 percent, to 14,044.95.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 2.58, or 0.17 percent, to 1,544.46, while the Nasdaq composite index rose 2.27, or 0.08 percent, to 2,743.26.
Bond prices rose as stocks pulled back, pushing down the 10-year Treasury note to 4.51 percent from 4.56 percent late Monday.
The dollar rebounded from record lows versus the euro, and also recovered some ground against the pound and the Canadian dollar. Gold, which has recently hit multi-decade highs, tumbled under pressure from the rising greenback; an ounce of gold fell $17.80 to $736.30 on the New York Mercantile Exchange.
Meanwhile, light, sweet crude for November delivery fell 20 cents to $80.04 a barrel in on the Nymex. Many analysts say oil's September rally to record levels above $83 a barrel was due to speculative buying by investors taking advantage of the weak dollar.
A stronger dollar makes commodities more costly to foreign buyers, dampening demand.
Exxon Mobil fell $2.18, or 2.3 percent, to $91.77. It was the biggest decline of the 30 Dow components.
Both Citigroup Inc. and Toronto Dominion Bank announced acquisitions Tuesday, indicating that dealmaking is still happening despite a tighter-than-normal credit market.
Canada-based TD Bank Financial Group agreed to buy Commerce Bancorp Inc. in a cash-and-stock deal valued at $8.5 billion. But the acquisition news got a lukewarm reception from investors. Commerce fell 38 cents to $39.23, and Toronto Dominion fell $4.71, or 6.1 percent, to $72.23.
Citigroup said it is buying the rest of Nikko Cordial Corp. for shares valued at about $4.6 billion. Citigroup already owns a 68 percent stake in Nikko, Japan's third-largest brokerage. Citigroup, which estimated Monday that third-quarter profit will drop 60 percent, rose 6 cents to $47.78.
In other corporate news, Palm Inc., the maker of the Treo smart phone, reported late Monday it swung to a loss in the fiscal first quarter and predicted weaker-than-expected results for the current quarter. Palm fell 49 cents, or 3.1 percent, to $15.51.
The Russell 2000 index of smaller companies rose 4.85, or 0.59 percent, to 829.59.
Advancing issues slightly outnumbered decliners on the New York Stock Exchange, where volume came to 800.7 million shares.
Overseas, Britain's FTSE 100 fell 0.09 percent, Germany's DAX index rose 0.31 percent, and France's CAC-40 rose 0.45 percent. Japan's Nikkei stock average closed up 1.19 percent.
Source: Madlen Read, AP Business Writer
Labels: C, CBH, Commodities, Energy, NMX, NYX, PALM, TD, XOM
