NEW YORK – Stocks fell Monday as crude oil prices rebounded late in the session and concerns about the automotive sector intensified after Ford Motor Co. (F) slashed its profit outlook for the year.
The Dow Jones industrial average (search) was down 12.78 points, or 0.12 percent, to close at 10,448.56. The Standard & Poor's 500 Index (search) was up a mere 0.01 of a point, or 0.00 percent, to finish at 1,181.21. The Nasdaq Composite Index (search) was down 7.23 points, or 0.36 percent, at 1,992.12.
"All we've really been doing is going sideways," said Paul Cherney, chief market analyst at Standard & Poor's. "There's a little bit of caution ahead of tomorrow's FOMC minutes," he said, citing concern in the market that the Fed might imply more aggressive rate hikes to come, such as a 50-basis-point increase, instead of the 25-basis-point gains used so far.
But he added: "I think the Fed's been so clear about what they're going to do that if that were the case, they'd already have beaten it into the eardrums of everybody around. So there might be a relief lift tomorrow after everyone realizes that the Fed will remain at a measured pace.
"There's low volume and that's telling you that the sidelines are packed with people waiting for some sort of a headline to act as an inspiration telling them to buy or sell," Cherney said.
Investors welcomed reports that OPEC plans another production increase in May to meet steady demand. Crude futures climbed higher, however, breaking a five-session streak of lower prices. A barrel of light crude settled 39 cents higher at $53.71 on the New York Mercantile Exchange (search).
Falling oil prices helped the major indexes post weekly gains for the first time in a month, but crude futures remain high and analysts warned that investors will need to see strong first-quarter earnings over the next few weeks for stocks to recover further. Ford's announcement fed doubts about whether corporate America can keep profits up in the face of high energy costs.
"Right now, you see the economy growing and things are looking pretty good, despite all the worries," said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers. "But while the economy is climbing that wall of worry, stocks are running right into it. We'll need to see some pretty good earnings down the road to overcome that."
Ford weighed on the markets as the automaker said higher expenses and a difficult market would cut into its quarterly and full-year profits. Two brokerages downgraded the company's stock, and Standard & Poor's also cut its rating on Ford's debt. Ford tumbled 59 cents, or 5.4 percent, to $10.44, on the news; parts suppliers Delphi Corp. (DPH) slipped 11 cents to $3.99 and Visteon Corp. dropped 27 cents to $5.23.
Apple Computer Inc. (AAPL), maker of the iPod digital music players and Macintosh computers, pulled on Nasdaq, falling 4.2 percent, or $1.82, to $41.92. Apple is scheduled to report second-quarter results Wednesday and expectations are high for the company, which in January reported quarterly profit that blew past even the highest Wall Street forecasts. Meanwhile, the Wall Street Journal reported that its iPod faced a challenge from the cellphone industry.
Shares of coffee shop chain Starbucks Corp. (SBUX) weighed on Nasdaq, falling 2.3 percent, or $1.11, to $47.51, amid worries the stock is overvalued and the days of supercharged sales increases are over. Last Wednesday, the company reported a less-than-expected 6 percent gain in March same-store sales.
But Procter & Gamble Co.'s (PG) stock rose 1.5 percent, or 84 cents, to $55.34 after the consumer products company, a Dow component, raised its quarterly dividend 12 percent.
Dow industrial Microsoft Corp. (MSFT) added 3 cents to $24.97 after the company announced a settlement with computer maker Gateway Inc. (GTW) over antitrust issues. Microsoft, which agreed to assist Gateway in its marketing efforts, said it would take a $550 million charge to cover the settlement. Gateway rose 8 cents to $4.16.
Verizon Communications Inc. (VZ) fell 17 cents to $34.90 after the Dow component bought out MCI Inc.'s (MCIP) largest single shareholder, taking a 13.75 percent stake in the company and clearing the way for its $6.7 billion takeover of MCI, which gained 17 cents to $26.01. Qwest Communications International Inc. (Q), which had a $9.1 billion offer rejected by MCI, lost 11 cents to $3.82.
Aircraft maker Boeing Co. (BA) said Korean Air would order up to 20 of its new 7E7 Dreamliner jets in a deal estimated at $2.4 billion. Boeing rose 80 cents to $59.40.
Electronics retailer Circuit City Stores Inc. (CC) added 48 cents to $15.89 even after the company said fourth-quarter earnings fell due to intense competition and sharp price cuts over the holidays.
Trading was moderate, with 1.21 billion shares changing hands on the New York Stock Exchange, below the 1.46 billion daily average for last year. About 1.39 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year. Decliners outnumbered advancers on the New York Stock Exchange by about 9 to 7 and by about 2 to 1 on Nasdaq.
The Russell 2000 index of smaller companies was down 3.58, or 0.59 percent, at 607.17.
Overseas, Japan's Nikkei stock average tumbled 1.09 percent. In Europe, Britain's FTSE 100 closed down 0.21 percent, France's CAC-40 fell 0.16 percent for the session, and Germany's DAX index lost 0.1 percent in late trading.
Reuters and the Associated Press contributed to this report.