Stocks Drop on Surging Oil Prices

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Stocks fell on Wednesday as surging oil prices touched two-week highs, overshadowing a strong report on manufacturing orders.


The Dow Jones Industrial Average dropped 45.88 points, or 0.4 percent, to close at 10,457.80. The Standard & Poor’s 500 Index dropped 4.06 points, or 0.3 percent, to 1,190.01. The Nasdaq Composite Index dropped 11.50 points, or 0.6 percent, to 2,050.12.


Oil prices, which dropped last week, rose above $51 a barrel for the first time in two weeks. Light, sweet crude for July delivery closed up $1.31 at $50.98 a barrel after the U.S. government said oil inventories fell last week.


The soaring oil prices dwarfed a report showing that orders for big-ticket manufactured goods at U.S. factories shot up 1.9 percent in April, reflecting strong demand for autos, appliances and aircraft. The Commerce Department said it was the best showing in five months. The increase, which followed three straight monthly declines, was substantially better than the 1.3 percent gain analysts had been expecting.


Among local companies, Computer Sciences Corp. gained 3.8 percent to $47.50 after the El Segundo-based technology services and outsourcing firm reported late Tuesday net income of $411.8 million ($2.13 per diluted share) for the fourth quarter ended April 1, compared with of $190.6 million ($1.01) for the like period a year earlier


On the down side, shares of j2 Global Communications Inc. fell 3.4 percent to $35.53 after investors seemed to find little cheer in the L.A.-based messaging company’s announcement that it is now offering its fax-to-email service in Spain and Portugal. Subscribers can now choose local telephone numbers in four major cities in Spain and toll-free countrywide telephone numbers in Portugal.


KB Home lost 2 percent to $64.02 after the L.A.-based homebuilder sold $300 million of 10-year junk bonds today. It was the company’s first debt sale since it issued $300 million of 10-year notes on Dec. 7, according to Bloomberg News data. UBS AG managed Wednesday’s debt sale.


And Activision Inc. dipped 1.4 percent to $15.23 after the Santa Monica-based videogame publisher said it acquired Quebec-based game developer Beenox Inc. to boost its presence in Canada. Terms of the deal were not released. That news was weighed against a report that actors whose voices, likenesses or performances are used in video games will decide in the next two weeks whether to strike against Activision, THQ Inc. and several other game publishers. The two main actors’ unions are seeking a bigger cut of the burgeoning industry’s profit.

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