Stocks End Mostly Lower

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Citigroup raised its 2008 oil price forecast to $117 from $95 a barrel, and boosted its estimate for 2009 to $122 from $88 a barrel, citing fundamental reasons for the upward trend, driven by continued erosion of non-OPEC supply estimates, and the fact that demand, while softening, is by no means falling low enough to materially offset tightening supply.

The International Energy Agency said world oil demand will rise by 800,000 barrels per day this year, 230,000 bpd less than its previous forecast. That is the slowest pace in six years as a raft of fuel subsidy cuts in Asia erodes consumption. But the IEA also sharply lowered its projection for supply outside the OPEC, increasing consumers' reliance on the exporter group. The report adds to evidence that high oil prices, which hit a record $139.12 on Friday, are slowing oil consumption, S&P MarketScope said.

Natural gas producer XTO Energy Inc. (XTO) agreed to acquire Hunt Petroleum Corp. for $4.19 billion in cash and stock, and says it's looking for additional acquisitions as well.

There's been a seasonal correction in stock values, which could shed another couple of percentage points, says Orlando at Federated. But he sees the possibility of a pullback in crude prices to between $100 and $110 a barrel, which would provide a catalyst to get stocks moving higher again. Until that occurs, however, he recommends large-cap consumer staples and technology stocks as fairly safe bets because of the volume of their exports to foreign markets.

Among other stocks in the news on Tuesday, Texas Instruments (TXN) shares took a hit after the company narrowed its projected earnings and revenue ranges for the second quarter, lowering the upper end of its outlook. The semiconductor manufacturer now sees earnings of 43 to 47 cents per share, vs. a prior forecast of 42 to 48 cents, and revenue of $3.33 billion to $3.46 billion, vs. an earlier estimate of $3.24 billion to $3.50 billion. The company reportedly said that wireless handset sales were "unseasonably weak." Standard & Poor's maintained its hold rating on the stock.

American Superconductor (AMSC) shares soared after the company announced that it has received a $450 million order from Beijing-based Sinovel Wind Corp. Limited for core electrical components for 1.5 megawatt wind turbines. The contract calls for shipments to begin in January 2009 and increase in amount year-over-year through the contract's completion in December 2011.

CMGI Inc. (CMGI) shares plunged after the company reported a GAAP loss of five cents per share for its third quarter, vs. a profit of 19 cents per share a year ago, on a 15% revenue decline. The supply management services provider now expects fiscal 2008 revenue of about $1.05 billion to $1.10 billion, down from its previous range of $1.10 billion to $1.15 billion, and operating income, before any restructuring expenses, to be at the low end of its previous guidance of 2.0%-2.5% of revenue.

United Rentals’ (URI) shares rose after the Board approved a "modified Dutch auction" tender offer in which the company plans to offer to buy up to 27.16 million shares of its common stock at a price not less than $22.00 nor greater than $25.00 per share.

Major European indexes were lower Tuesday. In London, the FTSE 100 index fell 0.86% to 5,827.30. In Paris, the CAC 40 slipped 0.80% to 4,761.08, while Germany's DAX index shed 0.65% to trade at 6,771.10.

In Asia, Japan's Nikkei 225 ended 1.13% lower at 14,021.17, while Hong Kong's Hang Seng index dropped 4.21% to 23,375.52.

Treasury market

Treasuries were trading lower on Tuesday after Fed Chairman Bernanke pledged to fight inflation and signalled the Fed would not cut rates again this year. The 10-year note moved down in price to 98-12/32 for a yield of 4.07%, and the 30-year bond fell to 94-26/32 for a yield of 4.70%.

Bogoslaw is a reporter for BusinessWeek's Investing channel.