Wall Street ended an arduous first half quietly Monday, 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.
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 the Street that the chaos of the first half will soon end. Besides the punishing effect of higher oil, which threatens to stifle consumer spending and in turn, an economy still struggling to grow, the stock market is still contending with warnings of losses at financial companies.
These problems that show little sign of being resolved soon left Wall Street in tatters as the first half ended. The Dow Jones industrials are down nearly 20 percent from their record high of 14,198.09, set in October.
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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 rattled investors.
Financial stocks, which were leading the market higher before the credit crisis struck, ended the half with even steeper losses than anyone expected — just a few months ago, there were predictions that the credit crisis would soon end. Airline stocks have been devastated by the rising price of oil. Detroit automotive stocks, as ever battling competition from overseas makers, are also being pummeled by the economy and energy prices.
Investors made relatively small bets ahead of the coming earnings and as the quarter moved toward a close. The Dow rose 3.50, or 0.03 percent, to 11,350.01.
Broader stock indicators were mixed. The Standard & Poor's 500 index rose 1.62, or 0.13 percent, to 1,280.00, and the technology-laden Nasdaq composite index 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:
In just the month of June, the Dow dropped 10.19 percent; the S&P fell 8.60 percent, and the Nasdaq lost 9.10 percent.
For the quarter, the Dow fell 7.44 percent; the S&P lost 3.23 percent, while the Nasdaq had an anemic 0.61 percent gain.
For the first half, the Dow is down 14.44 percent; the S&P lost 12.83 percent; and the Nasdaq has fallen 13.55 percent.
Since their high point last October, the Dow gave up 19.87 percent; the S&P dropped 18.22 percent; and the Nasdaq is down 19.80 percent. A 20 percent drop from a market peak is considered the start of a bear market — although many analysts say Wall Street already has a bear market mentality.
Light, sweet crude, which began the year at $96 a barrel, fell 21 cents Monday 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.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which tends to move opposite its price, rose to 3.98 percent from 3.97 percent late Friday.
Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc., contends that the market must first see nervous investors pull more money from the stock market before Wall Street will begin to show meaningful signs of stabilizing. He said the coming earnings reports for the second quarter could indicate that while some parts of the economy, like the financial sector, are struggling, others might show decent earnings.