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Energy Sector Slide Drags Stocks Lower 10/22 16:33

   Stocks fell broadly on Wednesday, snapping a four-day winning streak for the 
Standard & Poor's 500 index, as investors shaken by recent swings in the market 
sold some of their holdings.

   NEW YORK (AP) -- Stocks fell broadly on Wednesday, snapping a four-day 
winning streak for the Standard & Poor's 500 index, as investors shaken by 
recent swings in the market sold some of their holdings.

   A slide in the price of oil dragged down energy stocks. Eight of the 10 
industry groups in the S&P 500 fell, led by a 1.7 percent drop in energy. 
Small-company stocks also fell as traders unloaded riskier assets.

   "The market is still nervous," said John Manley, chief equity strategist at 
Wells Fargo Funds Management. "The extreme volatility of the last few weeks is 
on our minds."

   The drop in the S&P 500 came a day after the index's biggest gain this year.

   Stocks were higher most of the morning on hopes that the European Central 
Bank would add to its stimulus program as well as news that U.S. inflation 
remained low last month. A batch of good earnings reports from U.S. companies 
also helped.

   Those gains vanished in the afternoon as the price of crude oil began to 
drop. Traders have worried about a steady decline in oil as global demand for 
energy recedes.

   "The market is taking a bit of breather," shrugged TD Ameritrade Chief 
Strategist JJ Kinahan. "People are reassessing what their expectations should 
be for the rest of the earnings season."

   The S&P 500 dropped 14.17 points, or 0.7 percent, to 1,927.11. The Dow Jones 
industrial average fell 153.49 points, or 0.9 percent, to 16,461.32. The Nasdaq 
composite fell 36.63 points, or 0.8 percent, to 4,382.85.

   The losses were mitigated by a batch of generally positive third-quarter 
earnings reports, which suggested that corporate profits were still growing at 
a healthy clip. Yahoo jumped 5 percent after reporting blowout earnings.

   The closely watched Vix index, a gauge of expected swings in stock prices, 
surged nearly two points to 18. That is above the recent average of 15, but far 
below last week's high of 30.

   TD Ameritrade's Kinahan suggested investors may have pushed up the Vix in 
reaction to news of a gunman killing a soldier outside a war memorial in Canada 
earlier in the day. But he was doubtful the shooting impacted the overall 
market much.

   A big question hanging over stocks is just how good can corporate earnings 
get as Europe inches closer to recession and China slows.

   So far this earnings season, investors have been encouraged. With about a 
fifth of S&P 500 companies out with their results and outlooks, stocks look 
reasonably priced as measured by expectations of future earnings. The index is 
trading at 15.8 times expected earnings per share over the next 12 months, 
according to S&P Capital IQ, a research firm. That is not much lower -- meaning 
cheaper -- than the average of 16.4 since 2001.

   But other measures, comparing stock prices to earnings over the past 10 
years, for instance, suggest the market may be overvalued.

   Investors will get a clearer view on Thursday, a big day for earnings across 
industries. Those reporting include Microsoft, 3M, Amazon.com, Caterpillar and 
United Continental.

   The government reported that consumer prices rose 1.7 percent in the year to 
date through September, below the 2 percent target set by the Federal Reserve. 
Low inflation has allowed the central bank to keep rates at record lows to help 
the economy by encouraging lending and hiring.

   Frank Fantozzi, CEO of money management firm Planned Financial Services, 
says low inflation is another reason to resist selling when stocks are 
dropping, like they did Wednesday.

   "Energy prices are pretty low and wages have stayed pretty flat. You look at 
that, and GDP growing pretty healthily, and there are too many good things," 
Fantozzi said. "The market should push through this."

   Among stocks making big news:

   -- Broadcom, a semiconductor company, rose 5.5 percent, the largest gain in 
the S&P 500, after reporting earnings late Tuesday that topped Wall Street 
estimates. The stock rose $2.04 to $39.37.

   -- Biogen Idec dropped 5 percent despite a strong quarter. The drug company 
said a patient who took its newest multiple sclerosis drug suffered a brain 
inflammation and later died. The stock dropped $17.70 to $309.07.

   The price of oil fell sharply after the Energy Department reported an 
increase in oil inventories that was far larger than analysts expected. The 
benchmark U.S. crude contract fell $1.97 to $80.52 a barrel in New York.

   Brent crude, a benchmark for international oils used by many U.S. 
refineries, fell $1.51 to close at $84.71 on the ICE Futures exchange in London.

   In other energy futures trading on the NYMEX, wholesale gasoline fell 5.7 
cents to close at $2.156 a gallon, heating oil fell 4.0 cents to close at 
$2.473 a gallon and natural gas fell 5.2 cents to close at $3.659 per 1,000 
cubic feet.

   Bond prices didn't move much. The yield on the 10-year Treasury note held 
steady at 2.22 percent.

   Gold fell $6.20 to $1,245.50 an ounce, silver fell 32 cents to $17.23 an 
ounce and copper fell a penny to $3.02 a pound.


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