Higher oil prices
unnerve market

NEW YORK » Stocks slumped yesterday as oil prices inched back up from earlier lows and an investigation of the insurance industry pressured managed care companies, trumping better-than-expected earnings from International Business Machines Corp. and Texas Instruments Inc.

Shares of managed care providers tumbled on newspaper reports that an ongoing probe by the office of New York Attorney General Eliot Spitzer extended to health insurers. Volatile oil prices also prompted investors to sell; although crude retreated for a second session, the market was unnerved by its slow creep back above $53 per barrel.

"Between Spitzer and oil prices, it's taking away from some of the party that we saw earlier with IBM and Texas Instruments, which has helped the Nasdaq hold it together today," said Steven Goldman, chief market strategist for Weeden & Co. in Greenwich, Conn.

The Dow Jones industrial average was down 58.70, or 0.59 percent, at 9,897.62.

The broader gauges were also lower. The Standard & Poor's 500 index sagged 10.79, or 0.97 percent, to 1,103.23. The Nasdaq composite index fell 13.62, or 0.70 percent, to 1,922.90, despite strength among chip stocks on earnings news. The Philadelphia Semiconductor index was one of the market's few bright spots, closing up 1.03 percent.

Capping the lid on stocks, persistent supply worries and an attack on a key Iraqi pipeline helped oil rebound after a steep decline Monday, and although prices stayed in negative range, they did make up some of their losses. Light, sweet crude for November delivery closed down 38 cents at $53.29 on the New York Mercantile Exchange. Other commodities were also under pressure, including steel and paper.

In economic news, the Labor Department reported a modest 0.2 percent rise in September for its Consumer Price Index as lower prices for new cars and airfares helped temper a rise in energy and medical care costs. The reading of the government's most closely watched inflation barometer matched economists' expectations, but the report raised some worries. "Core" prices -- which exclude volatile energy and food prices -- rose 0.3 percent on higher lodging costs, a greater increase than the 0.2 percent projected by economists. Some saw this as a signal that the run-up in energy costs is starting to take its toll.

"It looks like the price hikes on the commodity side are starting to bleed into consumer prices," said Jack Ablin, chief investment officer at Harris Private Bank. "I don't think you can sustain this constant bombardment of energy prices, and higher food prices too, and not have it bleed through to the consumer."

It was unclear whether the inflation reading would have any impact on the Federal Reserve's policy on interest rates. The Fed has boosted short-term rates three times this year, and many analysts believe its Nov. 10 meeting will bring a fourth hike.