Shares of airline operators declined Wednesday after an analyst downgraded the sector before the opening bell, citing concerns over rising fuel costs, and as oil again spiked to new records.
Soleil Securities analyst James M. Higgins cut his rating on the sector to "Neutral" from "Outperform," citing a "relentless fuel price rise."
The cost for a barrel of light, sweet crude reached a new record above $132 a barrel Wednesday on the New York Mercantile Exchange after the government reported that supplies of crude and gasoline fell unexpectedly last week. Fuel costs are the biggest expense for airlines.
AMR Corp., parent of American Airlines Inc., continued to see its share price fall in the regular session after losing as much as 4.7 percent in the premarket. Shares plummeted 21 percent to $6.46 in midday trading.
UAL Corp., operator of United Air Lines Inc., lost as much as 4.4 percent in the early going and spiraled 21 percent lower to $9.11 in the regular session. Continental Airlines Inc. declined 2.3 percent in electronic trading Wednesday and fell 12.7 percent to $14.28 at midday.
Despite posting a higher fiscal second-quarter profit on strong international demand for computers and printers, shares of Hewlett-Packard Co. fell as much as 56 cents to $45.90 before the bell as Wall Street focused on the integration of Electronic Data Systems Corp. and whether it would weigh on results going forward. Shares slipped 3.2 percent to $44.98 in regular trading.
A proposed spin-off of Time Warner Cable Inc. from parent Time Warner Inc. sent shares higher, as a Cowen & Co. analyst said the move could lead to strong cash flow growth for the cable company. Shares rose as much as 4.2 percent early on and added 2.9 percent to $31.10 in the afternoon.
(This version corrects name of research firm to Soleil Securities in 2nd graph)
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