U.S. stocks fell, sending the market to its first
weekly drop in a month, on concern that record crude oil prices will
reduce profits at refiners and lower copper and gold prices will hurt
mining companies.The Standard & Poor's 500 Index sank 7.38, or 0.5
percent, to 1,390.3 at 11:08 a.m. in New York, giving it a 1.7 percent
decline this week. The Dow Jones Industrial Average slid 88.66, or 0.7
percent, to 12,778.12, led by a 7 percent drop in American
International Group Inc. The Nasdaq Composite Index lost 2.15, or 0.1
percent, to 2,449.09. More than four stocks fell for every three that
rose on the New York Stock Exchange.Energy companies in the S&P 500
contributed the most to the retreat even as crude surged to a record
above $126 a barrel. Producers of raw materials retreated 1.9 percent
as a group, led by Freeport-McMoRan Copper & Gold Inc. and Nucor
Corp.
Valero Energy Corp., the biggest U.S. refiner, tumbled to an almost
three-year low after Goldman Sachs Group Inc. said it may face
reductions in profit estimates. Dril-Quip Inc., which makes equipment
for offshore oil and gas production, retreated after profit missed
estimates by 10 percent. Financial shares pared earlier declines, led
by Citigroup Inc. after the largest U.S. bank said it plans to sell
$400 billion in assets.
Mylan Inc. fell 9.8 percent to $11.23. The largest U.S. maker of
generic medicines reported a wider first-quarter loss on costs tied to
the $6.9 billion purchase of Merck KGaA's generics division in October.
McDonald's Corp. fell 42 cents to $59.35. Goldman Sachs Group Inc.
removed the world's largest restaurant company from its ``conviction
buy list'' and added Burger King Holdings Inc. McDonald's had risen 16
percent since being added to the list June 12, and additional gains may
be ``muted'' in the coming months, Goldman analysts led by Steven T.
Kron wrote in a report. Burger King may benefit from price increases
and extended summer hours, Goldman said.
Financial shares dropped 0.2 percent, paring a decline of as much as
1.3 percent. Citigroup added 14 cents to $24.44 on plans to ``wind
down'' about $400 billion of assets as part of a program to return to
profitability. The bank announced the wind- down today in a
presentation posted on the company's Web site. The New York-based
company, which lost $5.1 billion in the first quarter, has recorded
more than $40 billion of credit losses and writedowns since the
subprime mortgage market collapsed last year.
The spike in oil prices took its toll on sentiment and knocked the wind out of the market's sails. Its effect was punctuated at the end of the week when FedEx (FDX) issued an earnings warning late Friday that was pinned on rising fuel costs.
By the same token, the financial sector also had a heavy hand in the
action, falling 6.3% for the week following a batch of ugly earnings
reports from the likes of Fannie Mae (FNM), UBS (UBS) and Dow component American International Group (AIG).