Record oil price
drives stocks down
NEW YORK >> Another surge in oil prices sent stocks plummeting yesterday, with the Dow Jones industrial average shedding more than 160 points and the Nasdaq composite index and Standard & Poor's 500 recording new lows for the year.
Investors reacted strongly to the oil hike, selling off rapidly as the afternoon progressed. A barrel of light crude closed at a record-high $44.41, up $1.58.
Over the past few weeks, drops in stock prices have corresponded almost directly to rising oil prices, which have climbed on terrorism fears. Yesterday's rise, attributed to Russian oil conglomerate Yukos' ongoing troubles with the government there, prompted heavy selling in the last hour of trading.
The Dow fell 163.48, or 1.6 percent, to 9,963.03, closing below the 10,000 mark for the third time in the last 10 sessions. It was the blue chips' second-largest slide of 2004; it lost 168 points on March 11, when the markets turned sharply downward to end the rally that began a year earlier.
Broader stock indicators also fell sharply. The S&P 500 index dropped 17.93, or 1.6 percent, to 1,080.70, and the Nasdaq was down 33.43, or 1.8 percent, at 1,821.63. It was the lowest close for the Nasdaq since Sept. 30, and the lowest for the S&P 500 since Dec. 17.
Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 1.39 billion shares, compared with 1.36 billion on Wednesday.
Selling was widespread, with industrial and materials stocks the worst losers, followed closely by health care and discretionary consumer stocks.
"We've had some good economic numbers, but with the high price of oil and the terror alert, there's a lot of pressure on the market on a short-term basis," said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. "These oil prices will eat away at consumer confidence, consumer spending and start to affect business decision making."
Oil dominated investors' thoughts, causing them to ignore other news, both good and bad. The Labor Department reported a drop of 11,000 first-time unemployment filings, and said the number of people who continue to receive benefits fell by 35,000 to 2.91 million -- down from 3.62 million a year ago.
Many investors, however, were waiting to see what clues the jobs creation report would have about economic growth. Last month's report fell markedly short of expectations.
Retail sales figures, another key barometer of economic health, failed to live up to expectations. Major retailers announced mixed sales data yesterday, with many apparel merchants issuing disappointing numbers. Companies including Wal-Mart Stores Inc. and Target Corp. had stronger sales in July, but investors were hoping for better news.