Falling oil, mixed stocks

NEW YORK (CNNMoney.com) -- Stocks slipped at midday Tuesday as investors welcomed falling energy prices, but also dumped oil and gas stocks after last year's run.

The Dow Jones industrial average (down 46.95 to 12,376.54, Charts) and the S&P 500 (down 5.68 to 1,407.16, Charts) index both lost close to 0.4 percent around 2-1/2 hours into the session. The Nasdaq (down 5.86 to 2,432.34, Charts) composite lost 0.2 percent.

Stocks managed small gains Monday, thanks to lower oil prices, a number of mergers and some bullish analyst comments on the tech sector.

But investors struggled Tuesday, with the further decline in oil prices having a mixed impact on stocks.

"A lot of oil stocks in the S&P are getting hurt and so the impact of the falling oil prices is less positive than it might otherwise be," said Steven Goldman, market analyst at Weeden & Co.

In addition, investors don't know whether the oil selloff is temporary or whether prices could spring back up again. Last summer, oil prices were up above $70 a barrel.

U.S. light crude oil prices for February delivery fell 82 cents to $55.27 a barrel, after sliding to an 18-month low in the morning.

Oil prices have been tumbling for the last week in response to unusually warm Northeast weather and bets that large hedge funds are cutting their exposure to the sector.

Lower oil and gas prices mean more money for consumers to spend on other things, and lower costs for corporations.

Airlines, which directly benefit from lower fuel costs, rose Tuesday, with the Amex Airline (Charts) index adding more than 1 percent.

But oil services companies were under pressure, with the Amex Oil (down 21.32 to 1,113.07, Charts) index down 2 percent.

Exxon Mobil (down $0.97 to $71.68, Charts), Valero Energy (down $0.06 to $28.16, Charts) and Sunoco (down $1.63 to $57.95, Charts) were all weaker.

Gold, natural gas and steel stocks all slipped too.

The Amex Gold Bugs (Charts) index lost more than 2 percent.

A number of tech companies were in focus due to a pair of big conferences happening on the west coast.

Apple Computer's annual Macworld expo in San Francisco was underway and analysts are expecting the company may announce the release of a mobile phone based on its iPod music player. A report Monday said Cingular will provide the wireless service.

Apple (up $2.10 to $87.57, Charts) shares gained 1.5 percent Tuesday ahead of a keynote speech from CEO Steve Jobs later today.

In addition, investors were attuned to news coming out of the Las Vegas-based Consumer Electronics Show, currently underway.

In other news, GE (down $0.09 to $37.46, Charts) is reportedly seeking buyers for its plastics business, worth up to $10 billion.

Among other movers, Sprint Nextel (down $2.05 to $17.59, Charts) slipped after issuing a financial outlook late Monday that disappointed investors.

The telecom said 2006 revenue will be roughly in line with previous estimates and 2007 revenue will fall in a range that sets the midpoint below analysts' forecasts. Sprint also said that it will cut about 5,000 jobs next year.

Market breadth was negative On the New York Stock Exchange, decliners topped advancers three to two on volume of 780 million shares. On the Nasdaq, losers surpassed winners by nine to five on volume of 950 million shares.

Treasury prices were barely changed, with the yield on the benchmark 10-year note at 4.65 percent. Bond prices and yields move in opposite directions.

In currency trading, the dollar rose against the yen and fell against the euro.

COMEX gold rose 10 cents to $609.50 an ounce.

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