Wall Street little changed as energy shares hit

By IBTimes Staff Reporter | June 01 2010 2:40 PM

Stocks were little changed on Tuesday after data showed manufacturing expanded for a tenth straight month, but worries of wider fallout from the oil spill in the Gulf of Mexico kept a lid on gains.

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In addition to the stronger-than-expected manufacturing data for May, construction spending recorded its largest gain in nearly 10 years in April, government data showed.

But the energy sector dragged on the market, with the S&P Energy index <.GSPE> down more than 2 percent after BP Plc failed in its latest attempt to stem the Gulf of Mexico oil spill.

The positive economic data was also tempered by concerns that global economic growth will be hurt by the euro zone's debt crisis, said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio. Indeed, data showed a more sluggish pace in euro zone manufacturing, while the rate of China's factory output eased and weighed on U.S. stocks in morning trade.

The U.S. economy is continuing to grow and prospects look bright. It's just investors are worried about the influence Europe will have on both Asia and our economy as the contagion progresses, said Lancz.

The Dow Jones industrial average <.DJI> added 25.92 points, or 0.26 percent, to 10,162.55. The Standard & Poor's 500 Index <.SPX> eased 3.01 points, or 0.28 percent, to 1,086.40. The Nasdaq Composite Index <.IXIC> was off 0.93 points, or 0.04 percent, at 2,256.11.

Among energy stocks, U.S.-listed shares of BP tumbled 13 percent to $37.38. BP will start a new and risky attempt to place a cap over the leak to funnel oil to the surface.

Halliburton Co slumped 12.6 percent to $21.71 after Goldman Sachs removed the oilfield services company from its conviction buy list, citing short-term concerns related to the oil spill and the moratorium on deep-water drilling.

Investors are worried about a wider impact on the sector if drilling becomes more regulated in light of the spill, said Lancz.

Tech shares were among the biggest gainers with Apple Inc rising 2.9 percent to $264.35 as a successful international launch of its iPad prompted analysts to raise earnings and sales estimates.

In merger news, ev3 Inc jumped 17.5 percent to $22.23 after Covidien Plc agreed to buy the maker of stents and other vascular devices for $2.6 billion. Covidien shares slipped 1.4 percent to $41.78.

On the New York Stock Exchange, decliners outpaced advancers by almost 2 to 1.

(Editing by Kenneth Barry)