Record oil prices accelerate sell-off
NEW YORK » Wall Street resumed its sell-off yesterday after oil hit a new record and a bearish analyst report renewed concerns that General Motors Corp. could run out of cash.
The stock market's pullback, which accelerated in the final hours of the week's last full trading day, left the Dow Jones industrial average officially in bear market territory, with the blue chips having fallen more than 20 percent from their October highs.
Oil surged to new records above $144 a barrel as the government reported a bigger-than-expected drop in U.S. supplies and as investors worried about tensions in the Middle East.
Worries that GM could go so far as to declare bankruptcy only added to investors' unease. The stock closed below the $10 mark for the first time since September 1954 when Dwight Eisenhower was president.
The Dow fell 166.75, or 1.46 percent, to 11,215.51, the lowest close since August 2006. It now stands 20.82 percent below its Oct. 9, 2007 record of 14,164.53.
Broader stock indicators also posted big losses after showing gains for much of the morning. The Standard & Poor's 500 index fell 23.39, or 1.82 percent, to 1,261.52, while the technology-laden Nasdaq composite index fell 53.51, or 2.32 percent, to 2,251.46.
The Russell 2000 index of smaller companies fell 19.25, or 2.78 percent, to 672.34.
Declining issues outpaced advancers by nearly 3 to 1 on the New York Stock Exchange, where volume came to 1.52 billion shares compared with 1.64 billion shares traded Tuesday.
The S&P is just shy of the 20 percent pullback that signals a bear market. While the Nasdaq is also in bear market territory, it hit that mark in March, moved higher and has now returned to a bear level.
Bond prices rose as investors exited stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.97 percent from 4.01 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices fell.
Wall Street is worried that rising energy prices are causing consumers to pare their spending in other areas.
Gasoline prices hit a fresh high ahead of the July Fourth holiday weekend, increasing half a penny to a new national record of $4.092 a gallon on average, according to AAA, the Oil Price Information Service and Wright Express.
Crude oil hit a record $144.32 a barrel in after-hours trading after reaching a record settlement of $143.57, an advance of $2.60 on the New York Mercantile Exchange. The Energy Department reported yesterday that U.S. crude oil supplies fell more than expected last week.
The Commerce Department said yesterday that factory orders rose by 0.6 percent in May. The result was in line with a consensus of Wall Street economists surveyed by Thomson Financial, but was much smaller than the gain of 1.3 percent for April.