bulls run out of steam Bulls run out of steamAfter trading in...

bulls run out of steam Bulls run out of steam
After trading in positive territory most of the session, stocks give up gains.
By Grace Wong, CNNMoney.com staff writer
May 23, 2006: 4:53 PM EDT


NEW YORK (CNNMoney.com) - A sense of calm that returned to the market Tuesday disappeared in the final minutes of trading as stocks gyrated and reversed earlier gains.

The Dow Jones industrial average (down 26.98 to 11,098.35, Charts) ended the session 0.2 percent lower and the broader Standard & Poor's 500 index (down 5.49 to 1,256.58, Charts) declined 0.4 percent. The Nasdaq composite (down 14.10 to 2,158.76, Charts) tumbled 0.7 percent after rallying as much as 1 percent earlier in the session.







More market news:
Why tech is hurting

The Nasdaq is down in 2006 even though the broader market is still sitting on yearly gains. Here's why. (more)
Weathering the market withering
Soon this sell binge will be over. In the meantime take a deep breath and look at India. (more)
A little froth could be good for blue chips
As money flees overpriced investments, it should flow to big growth stocks that are still undervalued. (more)


In the last half hour of trading, all three gauges gave up gains as investor jitters overshadowed a run up in commodity prices that had powered stocks most of the session.

"We're in for a choppy period as the market vacillates between fears of inflation and economic slowdown," Todd Clark, director of stock trading at Nollenberger Capital Partners, said.

A fresh wave of inflation worries and concerns about slowing economic growth have pummeled stocks the past two weeks.

The blue-chip Dow has lost more than 500 points, or about 4.7 percent, since May 10, when it came about 80 points within reach of its all-time high. The tech-fueled Nasdaq, meanwhile, has lost about 8.3 percent since hitting its highest level in more than five years last month.

Tony Dwyer, equity market strategist at FTN Midwest Research, said the market is in the process of bottoming out. "That process should take a few weeks, not a few days," he said.

Tuesday's market
Stocks bounced higher in the early going Tuesday as investors cheered a recovery in global markets and a jump in crude and metal prices.

On Monday, a sharp decline in stock markets around the world triggered nervousness in the U.S. Japan remained a weak point overseas Tuesday, but European shares rallied to a strong finish.

Soaring crude prices and climbing gold prices supported gains. But rising energy prices also can raise inflation worries.

U.S. light crude oil for July delivery climbed $1.80, or nearly 3 percent, to settle at $71.76 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $16 to settle at $673.70 an ounce.

Investors also took in comments from Federal Reserve Chairman Ben Bernanke, who testified before the Senate Banking Committee on the topic of improving financial literacy. He faced questions about the outlook for stocks but said he didn't want to make any judgments about movements in the market.

What moved?
Decliners edged out advancers on the Dow, where 18 out of 30 components finished the session in the red.

Chip stocks gave up gains late in the session, with the Philadelphia Semiconductor Service index declining 1.6 percent.

Microsoft (down $0.09 to $22.79, Research), which hit a 52-week low during Monday's session, turned lower after rallying as much as 1 percent.

Oil stocks, including Valero Energy (up $1.62 to $58.69, Research) and ConocoPhillips (up $0.13 to $62.70, Research), gained.

Metal stocks also showed strength. Copper producer Phelps Dodge (up $3.26 to $83.06, Research) climbed 4 percent, while metals miner Goldcorp (up $0.48 to $30.68, Research) added about 2 percent.

Among other stock movers, shares of Fannie Mae (up $0.45 to $50.72, Research) rose after regulators said the mortgage giant agreed to pay a $400 million fine related to its $11 billion accounting scandal.

Shares of Toll Brothers (up $0.45 to $27.35, Research) jumped nearly 2 percent after the homebuilder reported better than expected earnings, but the company lowered its earnings guidance in the latest sign of a slowing U.S. housing market.

Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by a margin of six to five on volume of 1.90 billion shares. On the Nasdaq, losers also beat winners by a margin of three to two as 2.17 billion shares changed hands.

Treasury prices turned higher late in the session, lowering the yield on the benchmark 10-year note to 5.02 percent, down from 5.04 percent late Monday.

In currency trading, the dollar was little changed against the euro and the yen.
.

SAVE | EMAIL | PRINT |