Analysts say Wall Street’s 2 percent drop reflects skepticism about the strength of economic data.
By Staff and Wire Reports
Published: 6/16/2009 2:23 AM
Last Modified: 6/16/2009 5:44 AM
Doubts about the economy pushed the stock market to its worst point loss in eight weeks and helped extend the oil market’s recent downturn.
The Dow Jones industrials fell 187 points Monday, their biggest drop since April 20. All the major market indexes fell more than 2 percent.
Meanwhile, in oil trading — which generally has been tracking the stock market’s movements during the past three months — benchmark crude for July delivery fell $1.42 to settle at $70.62 a barrel on the New York Mercantile Exchange. Crude prices have fallen nearly 3 percent over the past two trading days.
Some analysts said the Dow’s drop reflected skepticism that there are enough encouraging signs in the economy to justify the spring rally.
Traders reacted Monday to an index of manufacturing in New York indicating that demand weakened in June, as well as a weaker report from the Federal Reserve Bank of New York.
The Dow and the S&P 500 index have been on an upswing that has seen increases in 12 of the past 14 weeks, and the last four straight weeks. But traders are having a harder time wringing advances from stocks as questions remain about whether unemployment, still-weak U.S. home prices and inflation will trip up a resurgence in the economy.
Harry Rady, chief executive of San Diego-based Rady Asset Management, said stocks have risen too fast given how troubled the economy remains.
“The market just seems to keep driving the car into the wall and then wonders why it can’t keep driving,” Rady said.
In Tulsa, James “Skip” Nichols, owner of Financial Planning Resources Inc., said he thinks Wall Street is seeing a long-term bear market despite the recent rally. The market may still go up some as it often does in long-term “sideways” patterns, he said.
Nichols said, however, that he wouldn’t be surprised if the current activity is part of a long-term bear market that actually has been in place for nine years. The bear, or negative, market could continue for another five to six years, the money manager said.
For average investors, “I would say they shouldn’t panic and jump out right now if they’ve reinvested, but they should be very, very concerned and be watching for other signs that (the market) may be going into another dip. The dip could take away all the gains we’ve had,” Nichols said.
The Dow fell 187.13, or 2.1 percent, to 8,612.13, and returned to a loss for the year. The broader Standard & Poor’s 500 index fell 22.49, or 2.4 percent, to 923.72, and the Nasdaq composite index fell 42.42, or 2.3 percent, to 1,816.38. Both indexes still are showing a gain for 2009.
Overseas exchanges also fell. Trading there was influenced by the dollar, which rose against most other major currencies following weekend comments from Russia’s finance minister, Alexei Kudrin, that the greenback likely would remain the world’s reserve currency.
In the U.S. energy market, gasoline prices rose Monday for the 48th straight day, matching a record going back to at least the 1970s.
In Tulsa, most retailers were charging $2.44 for a gallon of regular unleaded Monday evening, down a few cents from late last week.
The local wholesale price, however, was $2.55 Monday, unchanged from Friday, according to Bloomberg data.
A year ago, gasoline in Tulsa was $3.83. In early January, motor fuel was around $1.45.
Nationally, consumers now are paying about $1 billion a day for gasoline compared with about $600 million a day over New Year’s weekend, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.