Wall Street Drops as Energy Shares Tumble

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Wall Street Drops as Energy Shares Tumble

US stocks dropped to near record lows as losses in energy and small caps shares weighed on corporate deals and the better than expected results from Wal-Mart Stores Inc.

Wal-Mart rose 4.4% after its earnings topped forecasts. Cisco Systems Inc. rose 2.6% and Viacom Inc. rose 4.2% as the results beat estimates. DreamWorks Animation SKG Inc. rose 15% after people briefed on the situation said that Hasbro Inc. is holding talks to acquire the company.

According to Bloomberg, Exxon Mobil Corp. paced losses in energy shares with crude oil dropping to a low of three years.

The Dow Jones Industrial Average gained 0.1% or 16.55 points to 17,628.75 supported by Wal-Mart and Cisco and the Standard & Poor’s 500 Index dropped 0.1% to 2,036.01. The Russell 2000 Index of stocks dropped 0.6% to halt its rally of six days. The Nasdaq Composite Index gained 0.04% or 1.85 points to 4,676.98.

Fund manager at Huntington Asset Advisors Inc., Peter Sorrentino said, “The market is just churning right now, looking for an indication of which direction the future is going to take.”

Reuters quoted Hugh Johnson Advisors LLC chief investment officer Hugh Johnson as having said, “It’s great to see stocks going up, but at the same time investors are troubled about something, and what they are a little bit troubled about is valuation. That’s why you get this creep higher, not euphoria.”

Investors are selling the recent rally’s biggest winners as the Russell 2000 halted its six-day rally. The small caps index surged 13% the past month through yesterday, the largest increase of 30 days since Aug. 2009.

Joe Bell, Investment Research Inc. senior equity analyst said, ‘We had a pretty big run-up within the month of November and late October and we’ve seen a slowing of the momentum recently. From the context of a price standpoint, we’re due for a breather.”

To contact the reporter of the story: Jonathan Millet at john@forexminute.com