Oil jumps, stocks fall, UPS gives warning
NEW YORK » Wall Street extended its losses yesterday as a rise in oil prices and a profit warning from United Parcel Service Inc.
raised investors' anxiety about the well-being of the economy.
Technology names were among the steepest decliners, with the tech-dominated Nasdaq composite index falling more than 1 percent.
The surge in oil prices weighed on transportation stocks and contributed to a pessimistic tone in the market. Crude prices jumped following a government report showing U.S. inventories fell by more than expected last week. The rise hurt shares of airline and trucking companies, which have already struggled with high fuel costs.
UPS, the world's largest shipping carrier, pointed to a weaker economy and higher fuel costs in trimming its forecast. UPS fell $2.74, or 3.7 percent, to $70.57.
Joe Kinahan, chief derivatives strategist for the brokerage service Thinkorswim Group Inc., said investors are nervous about the implications, including inflation, of higher oil prices.
"It's the first week we have had in a while where stocks are trading on their own merit. That's why we're trading on oil," he said. "It's amazing how well the market has held in there with three days of not good news."
"The Dow Jones industrial average fell 49.18, or 0.39 percent, to 12,527.26.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 11.05, or 0.81 percent, to 1,354.49, and the Nasdaq declined 26.64, or 1.13 percent, to 2,322.12. The Russell 2000 index of smaller companies fell 13.54, or 1.90 percent, to 698.38.
Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where consolidated volume came to 3.43 billion shares compared with 3.66 billion shares traded Tuesday.
Bond prices jumped as stocks declined. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.48 percent in late trading from 3.56 percent late Tuesday.
Light, sweet crude jumped $2.37 to settle at a record $110.87 a barrel on the New York Mercantile Exchange after earlier rising as high as $112.21. The previous record, set last month, was $111.80.
The rise in oil hurt transportation stocks. Three relatively small air carriers have filed for bankruptcy in as many weeks -- in part because of high fuel prices. Among airlines, Continental Airlines Inc. fell $1.66, or 7.6 percent, to $20.24, while trucking company J.B. Hunt Transport Service Inc. fell $1.92, or 6 percent, to $29.85.
Gold prices rose, while the dollar was mixed against other major currencies.
AMR Corp. fell $1.15, or 11 percent, to $9.17 after its American Airlines canceled more than 1,000 flights as it inspects the wiring on some of its aircraft. The move comes a day after American canceled 460 flights after federal inspectors found problems in work done two weeks ago on wiring.
Boeing Co. delayed its 787 jetliner by another six months, but some analysts had expected a greater delay. The stock, one of the 30 that comprise the Dow industrials, rose $3.58, or 4.8 percent, to $78.60 and helped contain the blue chips' losses.