Closing Market Report
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Stocks finish mixed as crude prices rise
By Michael J. Martinez
Associated Press
NEW YORK » Inflation concerns dominated Wall Street yesterday, with stocks mostly lower as crude prices marched toward $68 per barrel and jobless claims fell. Interest in small-cap and technology stocks pushed the Nasdaq composite index narrowly higher, however, sending the index to its third straight five-year high.
While the economy has so far absorbed high energy costs, fears remain that chronically high prices could spark inflation. A barrel of light crude settled at $67.94, up 87 cents, on the New York Mercantile Exchange.
Strength in the labor market also unnerved investors, as the Labor Department reported a third straight drop in weekly unemployment claims. With the monthly jobs report due today, Wall Street worried that more people on the nation's payrolls would mean increased demand, another potential catalyst for inflation.
Should the inflation threat increase, the Federal Reserve would continue raising interest rates to combat higher prices -- a move that would make consumer loans and mortgages more expensive and corporate expansion efforts more costly.
"You still have a lot of uncertainty, and the jobs report tomorrow, which will set the stage for what the Fed could do," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia. "You're just not going to see a lot of buyers in the market ahead of that."
The Dow Jones industrial average fell 23.05, or 0.21 percent, to 11,216.50.
Broader stock indicators were barely mixed. The Standard & Poor's 500 index lost 2.52, or 0.19 percent, to 1,309.04, and the Nasdaq composite index rose 1.42, or 0.06 percent, to 2,361.17. It was the Nasdaq's best close since Feb. 16, 2001.
Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.89 percent from 4.84 percent late Wednesday. Gold prices rose, surpassing the $600 per ounce mark for the first time since 1981.
The increase in gold prices and the rise in oil spooked stock investors, as commodities are generally seen as a hedge against higher interest rates. With the economy growing, investors worry that more rate hikes will pressure corporate earnings, and thus share prices. However, there's also an unwillingness to abandon stocks, since once the Fed has stopped raising rates, there's the potential for stocks to rally.
Among individual companies, investors sent shares of Dow industrial Merck & Co. down $1.15, or 3.2 percent, to $34.84 after a New Jersey jury said the company hid the potential dangers of its painkiller Vioxx and awarded a plaintiff $5.4 million in damages.