US stocks dip on mixed data, surging oil

NEW YORK -- Wall Street extended its decline Monday as investors reacted to surging oil prices and a mostly negative batch of reports on how companies are handling a slumping economy and tight credit markets.

As crude briefly soared above $107 a barrel, corporate news Monday came in mixed. McDonald's Corp. said sales at stores open for at least a year jumped by 8.3 percent year-to-date in February. But Blackstone Group, the private equity firm, posted a loss for the first quarter. The worse-than-expected results came amid tough credit conditions and losses from a big stake in the troubled bond insurer Financial Guaranty Insurance Co.

A letter to shareholders Monday from MBIA Inc.'s chief executive saying it was starting to write new business failed to lift the strugging bond insurance sector. MBIA and other bond insurers fell.

Mortgage lenders also plunged, as Thornburg Mortgage Inc. was downgraded by a Jefferies & Co. analyst and Countrywide Financial Corp. was reported to be under investigation by the government for securities fraud.

After last week's thumping, the stock market was restless as it awaited key economic data: Thursday's report on retail sales and Friday's report on consumer prices. Those two readings will give Wall Street a better idea of how much the average American is struggling with falling home values and rising costs, and how aggressively the Federal Reserve will need to act when it meets next week.

"The next three days, there aren't any set, big, market-moving reports," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "The economic data Thursday and Friday is going to be the last bit of news, the last showing, before seeing what the Fed will do on the 18th."

By late morning, the Dow Jones industrial average fell 47.95, or 0.40 percent, to 11,845.74.

Broader stock indicators also retreated. The Standard & Poor's 500 index fell 7.17, or 0.55 percent, at 1,286.20, while the Nasdaq composite index fell 13.43, or 0.61 percent, to 2,199.06.

Last week, increasing worries about the economy and the continuing fallout from the credit crisis pounded the stock market. The Dow ended down 3.04 percent, the S&P 500 index was off 2.80 percent, and the Nasdaq composite index closed with a loss of 2.60 percent.

In positive economic news Monday, the Commerce Department said U.S. wholesale inventories increased in January by 0.8 percent, more than expected, and U.S. wholesaler sales rose 2.7 percent, their widest jump since March 2004.

Recent record-breaking surges in commodities prices have worried many investors about whether the Federal Reserve might hesitate to lower key rates by as much as they want ¡X at least a half percentage point. Over the past few months, policy makers have cited the staggering economy as a greater risk than inflation.

There is great concern that the Fed's moves might not be enough to keep the sagging economy out of recession. News from the Labor Department Friday that the economy lost 63,000 jobs last month set off another steep drop in stocks.

On Monday, gold slipped, the dollar traded mixed, and crude oil soared $1.70 to $106.85 a barrel on the New York Mercantile Exchange.

Early Monday, JPMorgan analysts slashed their year-end target for the S&P 500 index and earnings for S&P 500 companies, after the bank's chief economist said he believes a recession began in January.

The Russell 2000 index of smaller companies fell 3.91, or 0.59 percent, to 656.20.

Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange, where volume came to a light 415.6 million shares.

McDonald's, a Dow component, rose 87 cents to $53.14.

Blackstone fell 54 cents, or 3.7 percent, to $14.04.

Thornburg Mortgage sank 59 cents, or 32 percent, to $1.20.

MBIA fell 74 cents, or 6 percent, to $11.26, while rival bond insurer Ambac Financial Group Inc. fell $1.92, or 20 percent, to $7.58.

Countrywide fell 33 cents, or 6.5 percent, to $4.74.

Most Asian markets sank Monday, some in response to Wall Street's losses last week, with Tokyo's market falling to a 2 1/2-year low. In Tokyo, the Nikkei 225 stock average tumbled 250.67 points, or 1.96 percent, to 12,532.13 points, its lowest since September 2005.

Hong Kong's market bucked the trend, with a recovery in afternoon trading driven by bargain-hunting and gains at the bank HSBC. The Hang Seng Index rose 203.72 points, or 0.9 percent, to 22,705.05.

Stocks slipped on European exchanges. In afternoon trading, Britain's FTSE 100 fell 0.42 percent, Germany's DAX index fell 0.29 percent, and France's CAC-40 fell 0.48 percent.

(Agencies)