Tuesday’s Market Recap: Energy Stocks Lead Downward Slide In Market

The markets were down for the second day in a row, as the NASDAQ (^IXIC) dropped -2.81% to close at 1561.61.  The Dow (^DJI) and S&P (^GSPC) were both down over -2%, closing at 7789.56 and 815.55 respectively.  The 10-year Treasury saw prices increase an ended the session with a yield of 2.898%.  Oil was down settling at $49.15 while gold contracts were up settling at $883.30.

Leading the downward slides in the market today were energy stocks.  The price of oil fell below $50, negatively impacting energy companies.  Worries about the economy still are prominent in the sector as inventories are still on the rise.  Driving the sectors downward was Lukoil who announced a fourth quarter loss of $1.6 billion.  Lukoil was hurt by sinking oil prices and rising taxes, as it paid $3.8 billion in taxes.  Net income fell -3.9% from a year ago, and the Russian company also saw a fall in exports of crude oil by -6.8%.  ConocoPhillips (COP), which owns 20% of Lukoil, was down over -3% as a result of the news.  Energy companies are being hurt in the down economy as a result of inventories being higher due to less purchasing by consumers.  Consumers are using less gas as traveling has been reduced drastically, as people have been flying and driving less.

The first quarter earnings season did not start off well when Alcoa (AA) ushered it in with a -$0.61 cent a share loss, or -$497 million as it reported after hours.  Analysts were estimating that the loss would be -$0.54 cents a share for the aluminum company.  Shares were down from the beginning of the day as some felt that Alcoa would not meet estimates.  Alcoa is now down over -30% since the start of the year.   The weaker demand has been a result of construction and manufacturing companies not needing materials because of the lackluster economy, pushing aluminum prices down.  The aluminum company hopes that demand will increase in the second half of 2009 helping their ailing stock price.  Alcoa is down over -1% in after hours trading.

In rare positive news today Lincoln Financial (LNC) was up over 8% as it announced that it paid down $500 million in outstanding debt.  Lincoln also plans on paying of $200 billion in commercial paper in the coming weeks.  This will reduce the short-term debt of Lincoln Financial to $4450 million.  Lincoln rose while the rest of the financial sector fell due to the positive news on their debt reduction.  JP Morgan (JPM) led the financial sector down today as it was down over -3%.  Financials have not rallied with a lack of positive news so far this week, and the sector as a whole seems weaker with many believing that previous advances in financials were over zealous.

Disclosure: The mutual fund the author manages is long JPM.

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