Investors waiting
for trouble to pass

The Dow falls 42 over terrorism
fears and high oil prices

NEW YORK >> With the much-ballyhooed initial public offering of Google Inc. behind them and oil chugging to a new record high, investors took a step back yesterday, sending stocks lower.

The downward trend underscored that the equity market is deeply mired in the trading doldrums characteristic of late summer, though analysts noted there are additional pressures this year. Fears that the Olympics in Athens or the upcoming Republican convention in New York might be targets of terrorism have kept an unusual number of investors on the sidelines, and oil prices aren't helping, said Janna Sampson, director of portfolio management at Oakbrook Investments.

"People are thinking there is just no good reason to take on this risk," Sampson said. "I know I've got clients who are telling me they have money but they're waiting until after these things are over. And we don't often see institutional investors holding up for events."

The Dow Jones industrial average declined 42.33, or 0.4 percent, to 10,040.82.

The broader gauges were also lower. The Nasdaq composite index fell 11.48, or 0.6 percent, to 1,819.89. The Standard & Poor's 500 index was down 3.94, or 0.4 percent, at 1,091.23.

Oil prices soared $1.43 to a new record high of $48.70 on the New York Mercantile Exchange, despite assurances from Iraq that it would resume full exports from its southern terminals. Further rattling traders, a radical Iraqi cleric rejected an offer to peacefully end his militia group's two-week-old standoff in the holy city of Najaf.

In economic news, the number of Americans filing new claims for unemployment benefits fell for a third consecutive week, suggesting improvements in the labor market after a rough patch earlier this summer.

But analysts pointed out that the figures do not include the impact of Hurricane Charley, which will be reflected in next week's data.

Separately, a measure of future economic activity fell in July for the second consecutive month, reinforcing other data that indicates the recovery is slowing. The decline in the Conference Board's Index of Leading Economic Indicators reflects growing concerns about rising costs for energy and food, as well as worries about future economic growth.

In addition to energy prices, which have raised worries about inflation and the prospect of corporate earnings growth in the second half, weaker forecasts from software companies have weighed heavily on the market. With many shares oversold after weeks of sluggish trading, the bounce seen during the previous four sessions could simply have been a counter rally, analysts said.