NEW YORK (Reuters) - Stocks closed down for a third session
on Tuesday as higher bond yields raised concerns about
borrowing costs and more fallout from the subprime mortgage
market kept investors on edge.
But a drop in oil prices eased worries about inflation and
takeovers in health care and chemicals increased optimism about
share valuations, limiting the market's decline.
During the session, stocks remained skittish and swung back
and forth from positive to negative.
"Everyone's trying to pick the bottom with housing and
(they are) going to continue to speculate on that," said John
O'Brien, senior vice president at MKM Partners LLC in
Cleveland.
Bill Gross, manager of the world's largest bond fund, said
the subprime mortgage crisis gripping U.S. financial markets
was not an isolated event and will eventually take a toll on
the economy.
Rising bond yields and fears the subprime mortgage meltdown
could spread hurt housing stocks, with the Dow Jones U.S. Home
Construction Index down 2.4 percent.
The Dow Jones industrial average slipped 14.39
points, or 0.11 percent, to end at 13,337.66. The Standard &
Poor's 500 Index dropped 4.85 points, or 0.32 percent,
to finish at 1,492.89. The Nasdaq Composite Index
declined 2.92 points, or 0.11 percent, to close at 2,574.16.
ORACLE EXTENDS DECLINE AFTER THE CLOSE
After the bell, Oracle Corp. , the world's
third-largest software company, reported a higher quarterly
profit. But its stock slipped 0.4 percent to $19.08 in
after-hours trading. It ended Nasdaq trading at $19.16, down
1.6 percent.
In contrast, shares of Nike Inc. rose 2.4 percent
to $55.10 in extended-hours trading after its results beat
estimates. Nike inched up 0.02 percent to $53.82 on the NYSE.
LENNAR SLIDES, BUT VENTANA SOARS
During the session, the benchmark 10-year U.S. Treasury
note was down 2/32, while the yield was up at 5.10
percent.
Government data showed new home sales fell more than
expected last month, while consumer confidence slid in June to
a 10-month low.
In addition, Lennar Corp. , the No. 2 U.S. home
builder, posted a disappointing quarterly loss and gave a
gloomy outlook, sending its shares down 3.1 percent to $37.55
on the New York Stock Exchange.
On Friday, Bear Stearns Cos. Inc. said it would
bail out one of two hedge funds it manages that has invested in
debt backed by subprime mortgages -- raising concerns that
other investment banks, hedge funds and investors may have to
take losses on their portfolios of collateralized debt
obligations.
After Tuesday's close, Bear Stearns said it will not bail
out a second hedge fund that has about $1.2 billion in debt.
During regular trading, the investment bank's stock rose 0.2
percent to close at $139.35 on the NYSE
Despite the broader positive effect of lower oil prices,
the decline weighed on shares of energy companies, making them
among the top drags on the S&P 500. Exxon Mobil Corp.
fell 0.7 percent to $81.82.
U.S. crude oil futures slid 2 percent. The front-month
contract fell $1.41 to settle at $67.77 a barrel.
Ventana Medical Systems Inc. , a tissue-based
diagnostics specialist, received a hostile takeover offer from
Swiss drug maker Roche , while Dutch chemical firm
Basell said it had agreed to buy U.S. chemicals firm
Huntsman Corp. .
Huntsman shares shot up 28.1 percent to $24.21 and topped
the percentage gainers on the NYSE. Ventana shares surged 47.7
percent to $76.43 and ranked No. 1 among the Nasdaq's biggest
percentage gainers.
Trading was active on the New York Stock Exchange, with
about 1.74 billion shares changing hands, below last year's
estimated daily average of 1.84 billion, while on Nasdaq, about
2.13 billion shares traded, above last year's daily average of
2.02 billion.
Declining stocks outnumbered advancing ones by a ratio of
about 2 to 1 on the NYSE and by about 8 to 7 on Nasdaq.
Copyright 2007 Reuters
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