After a three-day runup that saw stocks gain more than 3% and help the Dow Jones Industrial Average retake 12,000, stocks took a small step backward Tuesday, as investors continue to shift their focus from the developments in Japan to another spike in oil prices.
The Dow slipped 18 points to 12,019, the Nasdaq fell 8 points to 2684, and the S&P 500, unable to retake its own big, round number of 1300 for almost two weeks, slipped 5 points to 1294.
The assorted powers-that-be pointed the finger at higher crude, which rallied nearly 2% to close above $105 a barrel for the first time in about 10 days – around the time of Japan’s earthquake, which caused a tsunami and subsequent nuclear-plant crisis.
And the relative outperformance by oil-related stocks and utilities did much to support the notion that traders are returning to having energy prices comprise the main thesis of where stocks will go in the near term.
However, as we noted on Monday following the three-day mini-rally that had a decent amount of small-cap momentum to it, investors are also forced at this point to take a longer view: stocks in the U.S. have now shown no appreciation in more than two months, and what we saw a couple of weeks ago of oil prices north of $105 can only give pause as to the chances for much of a rally higher in the near term.
Bonds, too, were relatively flat, with the 10-year Treasury note’s yield holding at 3.3%, adding to the suggestion that inflation/deflation fears were fighting to a draw on Tuesday.
And so we were left with going back to a drubbing of the sectors that would easily be hit by elevated oil prices – recreational services, hotels, airlines, and automobiles.
Cruise line operator Carnival (NYSE:CCL) became Exhibit A in this sense, as the company’s stock fell 4.5% after it said its most recently quarterly profit and revenue was hit by higher fuel costs, as was its forecast for its full-year 2011 profit.
Royal Caribbean Cruises (NYSE:RCL) fell 3.5% in sympathy, but the somber mood also spread to names like amusement park operator Cedar Fair (NYSE:FUN), which fell 2.1%.
On the hotel front, Marriott (NYSE:MAR) fell 4.3%, while Starwood (NYSE:HOT) was off 3.4%. And the Dow Jones U.S. Airline Index slipped 1.4%, following a two-session rally in the sector.
