NEW YORK – Wall Street ended a grueling first half quietly yesterday, closing mixed as investors again based their trades on what has become the dominant force in the market: the price of oil. The major indexes closed out the first six months of 2008 with double-digit declines and are perilously close to the levels of a bear market.
This was the worst first half for the Dow Jones industrials since 1970, when the country's economy fell into recession. The more diverse Standard & Poor's 500 and Nasdaq composite indexes had their worst first half since 2002, when Wall Street was still suffering through the aftermath of the dot-com bust, the Sept. 11, 2001, terror attacks and a recession.
Yesterday, stocks pulled back in the early going as oil reached yet another record, this time above $143 a barrel. The market then gathered some strength as crude lost momentum and allowed some investors to consider buying equities that have been turned into bargains by months of volatility.
There is little expectation on Wall Street that the chaos of the first half will soon end. Besides the punishing effect of higher oil prices, which threatens to stifle consumer spending and an economy still struggling to grow, the stock market is still contending with warnings of losses at financial companies – the continuing fallout of the housing slump and the credit crisis that began nearly a year ago.
These problems that show little sign of being resolved left Wall Street in tatters as the first half ended. The Dow is down nearly 20 percent from its record high of 14,198.09, set in October, putting the blue chips on the threshold of a bear market. The market did have a spring recovery, which began in March, but it foundered in May as the combination of credit problems and higher oil prices rattled investors.
Investors wondering how the markets will fare will likely devote unusual scrutiny to reports on the economy and corporate earnings, which will arrive in force in the coming weeks. There appears to be little optimism.
“We've seen year-over-year estimates decline,” said Christopher Johnson, president of Johnson Research Group in Cincinnati. “It'll be a critical season.”
The Dow rose 3.50, or 0.03 percent, to 11,350.01. The S&P 500 index rose 1.62, or 0.13 percent, to 1,280. The technology-laden Nasdaq fell 22.65, or 1.21 percent, to 2,292.98.
The day's modest moves stood in contrast to the heavy losses the market has suffered.
For the quarter, the Dow fell 7.44 percent, the S&P lost 3.23 percent, and the Nasdaq had an anemic 0.61 percent gain.
Light, sweet crude, which began the year at $96 a barrel, fell 21 cents yesterday to settle at $140 on the New York Mercantile Exchange while retail gasoline set a new national average of $4.086 a gallon, according to a survey of stations by AAA, the Oil Price Information Service and Wright Express.
Declining issues outpaced advancers by about 8-to-7 on the New York Stock Exchange, where consolidated volume came to 4.91 billion shares, compared with 5.74 billion on Friday.
The Russell 2000 index of smaller companies fell 8.48, or 1.21 percent, to 689.66.
Overseas, Japan's Nikkei stock average fell 0.46 percent. Britain's FTSE 100 rose 1.74 percent, Germany's DAX index fell 0.06 percent, and France's CAC-40 rose 0.85 percent.
