New quarter, same old stock market.
Stocks were lower Tuesday amid another spike in oil prices. However, on the surface at least, new economic data were better than expected.
The U.S. ISM manufacturing index rose to 50.2 in June, a surprise increase from 49.6 in May.
U.S. construction spending fell 0.4% in May, less than economists were expecting, after a 0.1% decline in April. Despite a drop in consumer sentiment readings in June, economic data "are clearly outperforming a typical recession path," says Action Economics.
However, John Ryding and Conrad DeQuadros of RDQ Economics said the ISM index "suggests that manufacturing is stronger than typically seen in a recession," but "leading indicators within the ISM report were less upbeat," including a fall in orders, a rise in inventories and "very troubling" inflation readings.
Tuesday's session was the first of the third quarter, one day after the market ended a month, quarter and first half of the year that were disappointing by any measure. The Dow Jones Industrial Average has dropped 14.4% so far in 2008; Standard & Poor's 500-stock index has plunged 12.8%; and the tech-heavy Nasdaq Composite is down 13.6%. While June is often a quiet month, last month was one of the worst Junes on record, with the Dow's decline the biggest in percentage terms since 1930.
In the early afternoon on Tuesday, the Dow was down 146.23 points, or 1.29%, to 11,203.78. The S&P 500 lost 16.78 points, or 1.31%, to 1,263.22. The Nasdaq declined 31.40 points, or 1.37%, to 2,261.58.
On Tuesday on the NYMEX, crude oil for August delivery jumped $2.29 to $142.29 per barrel. Some reports blamed tensions in the Middle East. Also, an International Energy Agency report Tuesday said the supply of crude oil is expected to remain tight.
Among stocks in the news, the Belgian beer company InBev said Tuesday it would continue to pursue its $46 billion bid for Anheuser Busch (BUD) despite Anheuser's board rejection of the $65-per-share offer as "financially inadequate."
UBS (UBS) announced that four of the Swiss bank's 12 board members will step down amid large losses at the firm. Also, the Wall Street Journal reports that the U.S. Justice Department is pressing UBS to give up the names of clients who allegedly used the bank to avoid U.S. taxes.
CIT Group (CIT) said it will sell its home lending business for $1.5 billion to Lone Star Funds, including the assumption of $4.4 billion in outstanding debt. The business consists of $9.3 billion in assets and related servicing operations. CIT will also sell its $470-million manufactured housing portfolio to Vanderbilt Mortage and Finance for $300 million.
Dollar Thrifty Automotive Group (DTG) says it doesn't expect to achieve its previously issued earnings guidance for 2008.
MGIC Investment Corp. (MTG) denied reports that it plans to issue additional shares. The firm says its plans haven't changed.
TierOne Corp. (TONE) announced it will close its nine loan production offices across the country, and direct lending activity to its primary market in Nebraska, Iowa and Kansas.
Major European indexes fell Tuesday. In London, the FTSE 100 index dropped 2.33% to 5,494.80. In Paris, the CAC 40 lost 1.81% to 4,354.56, while Germany's DAX index slipped 1.61% to 6,315.22.
In Asia, Japan's Nikkei 225 moved 0.13% lower to 13,463.20, while Hong Kong's market was closed.
Treasury market
Treasury prices were higher Tuesday. The two-year note was up 02/32 to 100-18/32 for a yield of 2.597%; 10-year notes rose 05/32 to 99-13/32 for a yield of 3.956%; and the 30-year bond added 10/32 to 97-31/32 for a yield of 4.502%.