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Oil Prices, Economic Data Bad News for Stocks

Posted on: Friday, 16 September 2005, 00:00 CDT

Sep. 15--After holding near neutral for much of Wednesday, the weight of rising oil prices and bad economic news finally weighed down the major indexes in the afternoon.

Crude oil settled up nearly $2 a barrel and economic data indicated high fuel prices are having a negative effect on industrial output and consumer spending.

Profit-taking in technology shares sent the Nasdaq composite index down more than 1 percent. Locally, Garmin Ltd., after three consecutive record highs boosted shares to $65, fell 64 cents to $64 in trading that was slightly heavier than the daily average.

The Dow Jones industrial average fell 52.54, or 0.5 percent, and closed at 10,544.90. The Nasdaq dropped 22.42, or 1.03 percent, and closed at 2,149.33. The Standard & Poor's 500 index was down 4.04, or 0.33 percent, and closed at 1,277.16.

Crude futures surged as refinery recovery remained sluggish on the Gulf Coast and the government announced a sharp drawdown in the nation's oil reserves. A barrel of light crude settled at $65.09, up $1.98 on the New York Mercantile Exchange.

Wall Street also was concerned with nearly flat industrial output figures from the Federal Reserve -- because of the approach of Hurricane Katrina -- and a 2.1 percent drop in retail sales.

However, the Commerce Department noted that with automobile sales removed, other retail sales rose 1 percent, though much of that was because of a rise in gasoline prices.

The market's losses were magnified by light trading volume, as many investors held off making large bets and hoped the Fed, which meets Tuesday, could shed more light on the nation's economic situation.

"There seems to be a lot of uncertainty about what the Fed is going to say," Scott Wren, equity strategist for A.G. Edwards & Sons, told The Associated Press. "It seems a little early, given the meeting is next week, but I do think people are just waiting around for better news."

Nationally, investors kept their eyes on Northwest Airlines Corp. and Delta Air Lines, waiting the see if either or both would seek Chapter 11 bankruptcy protection. Each filed after markets closed.

Northwest Airlines' stock rose 30 cents, or 19.11 percent, to $1.87 before the filing. In after-hours trading, shares of the nation's fourth-largest airline were up 17 cents, or 9.09 percent, at $2.04.

Shares of Delta, the nation's third-largest airline, fell 7 cents, or 8.97 percent, to 71 cents after its Chapter 11 filing. Delta shares were up 2 cents to 73 cents in after-hours trading.

Among Kansas City area companies of interest:

NovaStar Financial Inc. was up 46 cents, or 1.26 percent, at $36.90. The real estate investment trust said it met its annual dividend distribution requirements as its board of directors declared a common stock dividend of $1.40 a share, payable Nov. 22 to shareholders of record Nov. 8.

Sprint Nextel Corp. was down 41 cents, or 1.62 percent, at $24.86. The telecommunications company said repairs and other expenses related to Hurricane Katrina would cost it $150 million to $200 million.

Yellow Roadway Corp. was up 10 cents at $41.23 after dropping to a 52-week low of $40.95. Yellow Roadway said it plans to buy back common shares totaling $50 million and called shares "significantly undervalued."

The Star's wire services contributed to this report.

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DAL, NFI, S, NWAC, YELL,

Source: The Kansas City Star (Kansas City, Missouri)

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