Oil worries and a raft of economic uncertainties plagued Wall Street yesterday, sending stocks lower as investors collected profits after...

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NEW YORK — Oil worries and a raft of economic uncertainties plagued Wall Street yesterday, sending stocks lower as investors collected profits after the strong gains of the previous two sessions.

The Dow Jones industrial average fell 37.57 to 10,595.93. The Dow had gained 186.13 the previous two sessions.

Microsoft, one of the 30 Dow stocks, fell 24 cents to close at $26.61 a share. Boeing, also a Dow stock, added 12 cents to $64.62.

Broader stock indicators also lost ground. The Standard & Poor’s 500 index slid 4.69 to 1,231.67, and the Nasdaq composite index dropped 6.00 to 2,166.03.

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Oil prices edged higher after a report said 60 percent of oil production in the Gulf of Mexico remains down because of damage by Hurricane Katrina.

An inventory report from the Energy Department showed the nation’s oil and gasoline stockpiles fell considerably, although the losses were less than Wall Street expected. A barrel of light crude settled at $64.49, up 12 cents, on the New York Mercantile Exchange.

With oil remaining in the mid-$60-a-barrel range, investors were concerned that corporate earnings and consumer spending would drop because of high energy costs. Investors also worried that the Federal Reserve would continue to raise interest rates at its Sept. 20 meeting. Despite Katrina’s devastation and death toll, the harm to the U.S. economy was less than originally expected, and hopes of a halt in rate increases dimmed.

“I think the Fed’s in a box here, and they really don’t have a choice but to raise rates,” said Michael Chren, portfolio manager for the Allegiant Funds. “Rebuilding from the hurricane will be an economic positive next year, you have concerns about inflation, and you have the housing bubble. I don’t think they can stop.”

But Fed Bank of San Francisco President Janet Yellen said yesterday that the Fed’s need to continue raising interest rates is “not as obvious” as it was and yet remains a “probable scenario.”

“Uncertainties and risks that could complicate things considerably were evident” before Hurricane Katrina, Yellen said in a speech. The Fed’s power over interest rates “has little scope to cushion the immediate economic fallout from a severe and sudden blow to a region.”

Investors’ preoccupation with oil and interest rates caused them to look past a surprising drop in first-time jobless claims. The Labor Department reported the number of new unemployment claims fell to 319,000 last week, 1,000 fewer than the prior week. More claims, however, are expected in the coming weeks from displaced workers.

“The economic data over the next several weeks are going to be difficult to interpret, and it’ll be interesting to see how the market reacts,” said Michael Sheldon, chief market strategist at Spencer Clarke. “The rally the past few days shows investors are willing to look past this period of uncertainty toward a pickup in growth in early 2006. It’s a pretty optimistic viewpoint and that could change when the data comes in.”

Yellen’s comments provided by Bloomberg News