A sharp rise in oil prices sent stocks sliding yesterday as investors nervously eyed new data showing that high energy prices have started...
NEW YORK — A sharp rise in oil prices sent stocks sliding yesterday as investors nervously eyed new data showing that high energy prices have started to slow the economy. Profit-taking in the technology sector also weighed heavily on the markets.
The Dow Jones industrial average dropped 52.54 to 10,544.90.
Microsoft, one of the 30 Dow stocks, declined 17 cents to close at $26.31 a share. Boeing, also a Dow stock, sank $1.22 to $64.18.
Broader indicators also fell. The Standard & Poor’s 500 index slid 4.04 to 1,227.16, and the tech-share-focused Nasdaq composite index fell 22.42 to 2,149.33.
Most Read Stories
- Milo Yiannopoulos at UW: A speech, a shooting and $75,000 in police overtime
- Alex Tizon, former Seattle Times reporter who won Pulitzer Prize, dies at 57
- Best way to slow aging? Exercise, but not just any kind
- Wave goodbye: Live Seafair hydroplane-race TV coverage sputters out after 66 years VIEW
- Nurses gain traction in Legislature on bills to address ‘dangerous’ staffing
Crude futures surged as refinery recovery remained sluggish on the Gulf Coast and the government announced a sharp drawdown in the nation’s oil reserves. A barrel of light crude settled at $65.09, up $1.98 on the New York Mercantile Exchange.
Wall Street also was concerned with nearly flat industrial-output figures from the Federal Reserve — due to the approach of Hurricane Katrina — and a 2.1 percent drop in retail sales. However, the Commerce Department noted that with auto sales removed, other retail sales rose 1 percent, though much of that was due to a rise in gasoline prices.
The market’s losses were magnified due to light trading volume, as many investors simply held off making large bets and hoped the Fed, which meets Tuesday, could shed more light on the nation’s economic situation.
“There seems to be a lot of uncertainty about what the Fed is going to say,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “It seems a little early, given the meeting is next week, but I do think people are just waiting around for better news.”
After a surprising run-up in stock prices in the week after Katrina, bolstered by data suggesting that the hurricane’s economic impact would be limited, investors have become tentative — especially as oil prices have started climbing once again.
“I think the market has managed the inevitable profit-taking very well, but there’s still a lot of skepticism out there,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisers. “I think the market’s overall tone is positive, but there’s a very uneasy truce right now between the positives and negatives, and we’ll have to see how things shape up in the coming weeks.”
In the battered technology sector, which had seen a sharp rise over the past two weeks, Baidu.com tumbled 25 percent, or $28.84, to $84.75 after Goldman Sachs and Piper Jaffray each initiated coverage of the stock with “underperform” ratings. Piper Jaffray said the stock’s valuation is “off the chart.”
Other Internet stocks also fell, with Google dropping $8.68 to $303 and Yahoo! losing 50 cents to $33.80.
The losses were mitigated somewhat by a strong report from Lehman Brothers, which rose 13 cents to $112.41 after having climbed more than 2 percent earlier in the session. The Wall Street firm reported a 77 percent jump in third-quarter profits, easily surpassing Wall Street’s forecasts due to record revenues in its investment-banking and investment-management segments.
“What we’re seeing from Lehman is that market conditions improved through the summer, and that conditions are likely to continue improving,” Johnson said. “That’s showing up in the earnings and in the detail of their reports.”