Stocks tumble after
gloomy price report

NEW YORK » A huge jump in wholesale prices sent stocks falling yesterday as investors worried that rising oil prices were starting to take a toll on the overall economy. Mediocre earnings reports from retailers, including Wal-Mart Stores Inc., also pressured the market.

Wall Street was concerned that the sharp increase in the Producer Price Index, which rose 1.7 percent in October after a 0.1 percent hike in September, would either eat into fourth-quarter profits or be passed on to consumers, with the latter possibility spurring inflation as time goes on.

The 1.7 percent increase in the PPI was the largest since January 1990. Without energy and food costs, which vary widely from month to month, "core" wholesale prices climbed in October by 0.3 percent for the second month in a row, the Labor Department reported.

"The PPI really wasn't that surprising. We knew energy prices were up and would start to affect wholesale prices, so that's nothing new," said Brian Belski, market strategist at Piper Jaffray. "Given that we've had a very strong move up in prices over the past few weeks, the fact that we're taking a rest here today isn't a bad thing."

The Dow Jones industrial average fell 62.59, or 0.59 percent, to 10,487.65. It was the Dow's largest single-session drop since Oct. 22, right before Wall Street's three-week run upward began.

Broader stock indicators were moderately lower. The Standard & Poor's 500 index was down 8.38, or 0.71 percent, at 1,175.43, and the Nasdaq composite index dropped 15.47, or 0.74 percent, to 2,078.62.

While oil prices have retreated in recent weeks, the lingering effect of October's $55-per-barrel highs may be felt through the rest of the year by businesses and consumers. However, prices have fallen sharply in recent weeks, giving hope to some stability in energy costs through the winter. A barrel of light crude was quoted at $46.11, down 76 cents on the New York Mercantile Exchange.

Analysts argued that mediocre forecasts for fourth quarter earnings, especially among retailers, has made investors more cautious after three weeks of exuberant buying.

Wal-Mart lost 81 cents to $56.89 after meeting Wall Street's profit expectations, posting a 12.7 percent increase in third-quarter profits and earning 54 cents per share. However, the company's third-quarter sales figures were below analysts' estimates, and investors also had hoped for a stronger fourth quarter outlook from the Dow component.