Stocks sink as oil
soars to $67.32

NEW YORK » Stocks sank amid increasing pessimism on Wall Street yesterday, shedding early gains after oil prices reached another record high and a mix of data provided conflicting views on the economy.

The surge in crude prices wiped out the advance that followed the Energy Department's latest inventory report, which showed a strong buildup of heating oil and distillate stocks. Concerns about a drawdown in crude oil and a tropical storm threatening oil facilities pushed crude futures to a new record. A barrel of light crude surged $1.61 to settle at $67.32 on the New York Mercantile Exchange, surpassing the previous record settlement of $66.86 per barrel on Aug. 12.

The market's earlier momentum grew out of the Commerce Department's latest report on new home sales, which rose to an annualized 1.41 million units, better than the 1.328 million home sales expected. But the government also reported a sharp decline in orders for big-ticket manufactured goods -- leading investors to wonder whether an economic slowdown was imminent.

"In all you're seeing sort of a mixed reaction out there," said Brian Williamson, an equity trader at the Boston Company Asset Management. "The oil data was good because of the distillates, but you're still seeing oil prices higher because of demand. And we're seeing a lot of volatility across the board."

The Dow Jones industrial average fell 84.71, or 0.81 percent, to 10,434.87.

Broader stock indicators also lost ground. The Standard & Poor's 500 lost 7.98, or 0.65 percent, to 1,209.59 -- falling back into negative territory for the year. The Nasdaq composite index dropped 8.34, or 0.39 percent, to 2,128.91.

Volume was light, which is typical for late August, but that only magnified stocks' volatility and possibly exaggerated Wall Street's reaction to oil prices and the economic news.

Investors started the session with the Commerce Department's report that durable goods -- items designed to last at least three years -- fell 4.9 percent in July, a sharp drop from the 1.9 percent climb in June and far steeper than the 1.5 percent drop economists had expected.

However, the home sales report helped home builder stocks rebound from the previous session's losses. Toll Brothers Inc. gained $2.07 to $50, KB Home jumped $1.24 to $72.20 and Lennar Corp. rose $1.17 to $60.10. Yet even the housing report carried a caveat -- while sales are up, the average price of a new home fell.