Dow plunges 174
on rising oil costs
By Michael J. Martinez
Associated Press
NEW YORK » A nearly 6 percent spike in crude oil prices sent stocks plunging yesterday, as investors already concerned about rising prices and inflation envisioned a repeat of last summer's selloff on Wall Street. The Dow Jones industrial average dropped 174 points, its biggest point drop since mid-2003.
Weakness in the dollar -- which fell sharply against the Japanese yen and lost ground against other currencies -- helped send crude futures soaring past $51 per barrel, much as they did during the third quarter last year, when the major stock indexes fell to multiyear lows. A barrel of light crude settled at $51.15, up $2.80, on the New York Mercantile Exchange.
The surge in crude futures sparked fears that the stock market would tumble further. That overshadowed strong earnings from Dow component Home Depot Inc. and intensifying merger talks between Federated Department Stores Inc. and May Department Stores Co.
"This distressing news about oil prices is really nagging at investors," said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. "It's not enough to break the camel's back, but that pressure will be there for a while."
The Dow fell 174.02, or 1.61 percent, to 10,611.20, its lowest close since Feb. 3. It was also the biggest one-day point drop for the Dow since May 19, 2003.
Broader stock indicators also fell substantially. The Standard & Poor's 500 index was down 17.43, or 1.45 percent, at 1,184.16, its lowest level since Jan. 31, and the Nasdaq composite index dropped 28.30, or 1.37 percent, to 2,030.32, its worst close since Jan. 25.
The Conference Board reported that consumer confidence fell slightly in February, hurt by January's losses on the stock market, continued high energy prices and slow job growth. The independent research group's confidence index fell to 104 from a revised 105.1 in January.
The dollar's drop was a negative for oil prices, since most major transactions are conducted in dollars, and foreign oil producers must charge more in order to make up for the falling value of the greenback. The sharp hike in oil prices took many in the market by surprise, especially with OPEC maintaining production levels and a relatively mild winter in the United States.
The dollar also pushed bond prices slightly lower, with the yield on the 10-year Treasury note rising to 4.29 percent. Gold prices rose as investors hedged against the dollar's losses.
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