NEW YORK – Stocks fell Monday on a combination of rising crude oil prices and a series of warnings from companies including Colgate-Palmolive Co. (CL), Unilever PLC (UL) and The New York Times Co. (NYT), but technology stocks limited their losses as investors bought beaten-down shares of semiconductors.
The Dow Jones industrial average (search) fell 79.57 points, or 0.77 percent, to close at 10,204.89, based on the latest data. The Standard & Poor's 500 Index (search) ended down 6.35 points, or 0.56 percent, at 1,122.20. The technology-laced Nasdaq Composite Index (search) slipped 2.02 points, or 0.11 percent, to finish at 1,908.07.
Growing anxiety about global oil supply sent crude futures higher as beleaguered Russian oil giant Yukos announced plans to stop shipments to China. The latest event to aggravate the oil market came just days after Hurricane Ivan menaced rigs and threw tankers off course in the Gulf of Mexico, cutting daily production in the region by half. Light sweet crude for October delivery settled up 76 cents at $46.35 on the New York Mercantile Exchange (search).
"Oil seems to be coming back on the forefront, and that set the tone for the market," Robert Drust, managing director of listed trading regional investment bank Wedbush Morgan in Los Angeles. Interest-rate sensitive stocks like home builders and brokerage stocks are also weighing on the market."
Some investors are reluctant to make new investments before a meeting of the Federal Reserve (search) on Tuesday. The Fed is widely expected to hike the benchmark fed funds rate on Tuesday to 1.75 percent, adding to quarter-point rate rises in June and August.
But what is more important for the market is what the central bank signals on future policy since recent weak data has raised doubts over the strength of the U.S. economy.
"The Fed is going to do whatever everyone thinks and raise by 25 basis points, so that should not be a surprise," said Peter Boockvar, equity strategist at Miller Tabak & Co.
"The only question is what they're going to say in the statement and that is always difficult to predict."
Colgate, which makes toothpaste, soap and other household products, dropped $6.10 to $48.23 after it warned that earnings for the second half of the year will fall short of earlier forecasts due to higher marketing costs.
Procter & Gamble Co. (PG), maker of detergent, toothpaste, diapers and other consumer products, fell more than 3 percent following a profit warning from its European rival, Unilever . P&G was down $1.88 at $54.38 and Unilever shares traded in New York were down more than 5 percent, or $1.82, at $33.22.
"Unilever and P&G are weighing on the market," said Todd Leone, head of listed trading at S.G. Cowen. "Oil is getting closer to $50 a barrel again and I think the market is a little bit heavy."
Altria Group Inc. (MO), the parent of cigarette maker Philip Morris USA, also helped drag the Dow industrials lower as a $280 billion racketeering trial of major cigarette makers gets under way this week. Altria fell nearly 3 percent, or $1.40, to $47.08.
The New York Times lost 64 cents to $40.16 after the newspaper publisher lowered its earnings forecast for the year and warned that results for the current quarter will fall below estimates due to declining revenue growth in September.
Citigroup (C) fell $1.55 to $45.40 days after regulators in Tokyo announced they would shut down the company's private banking business in Japan after finding "severe legal violations." Japanese operations of the world's largest financial services firm will be suspended Sept. 29. Merrill Lynch downgraded Citigroup to a "neutral" from a "buy."
Pfizer (PFE) shares were also lower after Morgan Stanley lowered its investment rating on the pharmaceutical company, saying its ability to "outperform its peer group is waning." The stock was down 56 cents, or more than 1 percent, at $31.16.
Analysts noted unusually strong performance among semiconductor shares despite forecasts of slower growth from chipmakers. The Philadelphia semiconductor index surged 2.9 percent.
"It seems a contrarian view is developing in the tech sector. There's a feeling that they're probably oversold, and as a result we're seeing investors having second thoughts about unloading them," said Peter Cardillo, chief strategist with S.W. Bach & Co. "Unfortunately, the market as a whole is going to continue to live with this oil issue; there's no indication prices are going to collapse anytime soon, so it will remain a daily focus."
About 1.2 billion shares changed hands on the New York Stock Exchange, below the 1.4 billion daily average for last year. About 1.6 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year.
The number of stocks on the decline outnumbered those rising by about 3 to 2 on the NYSE and the Nasdaq.
The Russell 2000 index, which tracks smaller company stocks, was down 2.43, or 0.4 percent, at 570.74.
Overseas, Japanese financial markets were closed for Respect for Aged Day, a national holiday. They will reopen Tuesday. In Europe, France's CAC-40 shed 0.6 percent, Britain's FTSE 100 declined 0.3 percent and Germany's DAX index fell 0.3 percent.
Reuters and the Associated Press contributed to this report.