Record Oil Prices, Lean Profits Drag Dow Down on Tuesday

By Randy Hall | July 7, 2008 | 8:22 PM EDT

( - A combination of oil prices breaking $54 a barrel and mixed earnings reports sent Wall Street slightly lower in Tuesday trading.

The Dow Jones Industrial Average slipped 4.79 points to 10,077.18; the Nasdaq Composite Index dropped 3.59 points to close the day at 1,925.17; and the Standard & Poor's 500 Index fell 2.55 points to 1,121.84.

Even before the opening bell sounded, investors received a pair of conflicting messages regarding the strength of the economy.

A report from Merrill Lynch indicated that the company's revenues fell 3 percent and earnings dropped 8 percent for the third quarter. Brokerage executives said that unusually light trading on Wall Street led to the drop.

However, Johnson & Johnson announced that the company surpassed both revenue and earnings estimates for the third quarter as profits rose 13 percent from a year ago. Prescription drug and over-the-counter skin care sales helped boost revenues.

Early in the day, crude oil reached a record price of $54.45 per barrel, which combined with concerns over production restraints in the U.S., Nigeria and Norway to send the markets down for the day. Nevertheless, oil prices fell to $52.51 by the end of the session, enabling Wall Street to regain most of its losses..

"I think this market is keyed in on oil and is ready to go if oil drops," Bill Groenveld, head trader for vFinance Investments, told the Associated Press. "As soon as we see any relief in oil, and who knows when that will happen, I think the market starts to move north if there's no earnings surprises this time around."

Trading overseas was also down during the second trading session of the week. Japan's Nikkei stock average, Britain's FTSE 100, Germany's DAX index and France's CAC-40 all lost at least 1 percent in trading on Tuesday.

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