NEW YORK – Stocks barely changed in light trading Tuesday as investors stayed out of the market despite another substantial retreat in oil prices. Tech stocks suffered due to a brokerage downgrade of Cisco Systems, while blue chips got a boost from an upgrade of Caterpillar.
The blue-chip Dow Jones industrial average (search) rose 25.58 points, or 0.24 percent, t0 10,098.63. The broader Standard & Poor's 500 Index (search) fell 0.43 of a point, or 0.04 percent, to 1,096.11. The technology-laced Nasdaq Composite Index (search) dropped 1.81 points, or 0.10 percent, to 1,836.89.
Although oil dipped briefly below $45 per barrel during the session, two days of falling prices weren't enough for cautious investors to get back into the market, despite very attractive prices.
Investors were concerned that oil prices, which topped $49 per barrel late last week but closed down 84 cents at $45.21 on the New York Mercantile Exchange (search), could advance again. Another sharp rise could raise corporate costs and reduce consumer spending, thus harming third- and fourth-quarter earnings
"Without any real big economic or geopolitical news here, the market's keying off of oil," said Jay Suskind, head trader at Ryan Beck & Co. "But we're in the dog days of August here, so there's just not going to be a lot of volume or conviction here."
Many investors were also making few trades leading up to the Republican National Convention, analysts said. They were also holding back as they awaited the government's employment report for August, due at the end of next week.
Oil companies Exxon Mobile Corp. (XOM) and ChevronTexaco Corp. (CVX) weighed on the market as their stocks fell along with the price of oil. Exxon fell 29 cents to $44.70. ChevronTexaco lost 29 cents to $92.83.
The market had little reaction to the National Association of Realtors' (search) existing home sales report, which showed that 6.72 million units changed hands in July, down 2.9 percent from June and less than economists had expected. Rising consumer prices and a drop in consumer confidence were blamed for the decline. However, it was still the third-best monthly reading on record, showing that consumers were still taking advantage of historically low interest rates.
While the housing data and oil prices were good news, it was difficult for buyers to gather any strength. Echoes of the last bear market have made investors very cautious, especially in low-volume sessions like Tuesday.
"People are very lethargic, and it's because it's been a very difficult market," said Richard Driehaus, chief investment officer of Driehaus Capital Management in Chicago. "Nobody really believes in growth. The market is much more sensitive to negative news."
An increase in stock options granted by Cisco Systems Inc. (CSCO) caused UBS to lower its price target for the network equipment maker by $1 per share. Cisco slid 21 cents to $18.97. Tech shares have been closely watched as they begin more thorough accounting of their stock options, a key part of many companies' compensation for employees.
Part of the Dow's gains came from Caterpillar (CAT), which rose $1.10 to $73.15 after Goldman Sachs upgraded the stock to "outperform" from "in-line/neutral," citing strong profit performance and an attractive share price.
Profits at food producer H.J. Heinz Co. (HNZ) slipped 9 percent from a year ago, though the company's 55 cents per share profit matched analysts' estimates. Heinz rose $1.03 to $37.63.
Information technology spending could rise over the next three years, according to a new survey by Accenture. However, the news failed to give tech shares a boost. Intel Corp.(INTC) slipped 22 cents to $21.67, Microsoft Corp. (MSFT) was unchanged at $27.24, and Applied Materials Inc. (AMAT) was down 29 cents at $15.93.
Regis Corp. (RGS), operator of the SuperCuts and Jean Louis David hair salons, tumbled $1.34 to $39.18 after matching Wall Street forecasts for the current quarter, but falling below expectations for its 2005 outlook.
Trading was light, with 1.1 billion shares changing hands on the New York Stock Exchange, below the 1.4 billion daily average for last year. About 1.3 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year.
Advancers outnumbered decliners about 3-to-2 on the NYSE and on Nasdaq by about 4-to-3.
The Russell 2000 index of smaller companies was up 1.54, or 0.3 percent, at 545.01.
Overseas, Japan's Nikkei stock average rose 0.2 percent. In Europe, Britain's FTSE 100 closed up 0.1 percent, France's CAC-40 climbed 0.1 percent for the session, and Germany's DAX index was flat.
Reuters and the Associated Press contributed to this report.