U.S. stocks declined across the board on Monday, with the market surrendering over 2 percent of the 14 percent rally that has occurred over the past two weeks. Equities retreated following statements from Germany that seemed to correct perceptions that the urgency in the Eurozone would be met with a fast fix. The ongoing challenges facing European banks was compounded by a regional manufacturing report that seemed to directly reject much of last week’s positive economic indicators. Sectors were hit broadly, but none as dramatically as the oil service sector.
Crude for November fell sharply for the day on the New York mercantile Exchange, with futures returning to $85.88 a barrel, reversing gains built on what was expected to be an optimistic meeting of the developed nations scheduled for today. When the outcome failed to please, crude began a retreat.
Following crude lower were oil service shares, especially from Halliburton (HAL), which announced earnings today. Halliburton earned 94 cents per share on projections of 91 cents but this didn’t help shares of the company as competition overseas and the lower price of crude were mentioned as sources that could threaten the performance next quarter. Some fear that the current onshore drilling boom, which has contributed to a record breaking $1 billion in operating income for the company, will have to end as environmentalists continue to contest the fracturing technology. “Fracking” as it is commonly referred has helped the company access oil and natural gas but may not be a long term solution. Additionally, weaker results overseas led some investors to worry about the company’s reliance on domestic strength and begin profit taking after the recent rally.
Elsewhere, El Paso Corp. (EP) bucked the broader trend and added a massive 24 percent to its share price following the company’s agreement to the terms of a $38 billion buyout offer from Kinder Morgan (KMI). Shares of the latter also ascended following the announcement, although much more moderately.
Another less enthusiastically received acquisition announcement came from AmeriGas Partners LP (APU), which announced plans to purchase the propane division of Energy Transfer Partners LP (ETP) for a deal worth $2.9 billion. Shares of AmeriGas tumbled while ETP gained.
Ongoing disputes from the April 2010 BP explosion also impacted trading today with Andarko Petroleum rallying following the company’s agreement to pay BP a $4 million settlement for its involvement in the oil spill. Shares of BP also rose.
Shares of the major oil names like Exxon (XOM) and Marathon (MRO), Chevron (CVX) and Hess (HES) all declined in trading with Marathon taking the hardest hit. For the most part the losses were minor. Most of the companies are lower but only moderately so for the year with the exception of Marathon which has lost over 25 percent in 2011.
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