Wall Street tumbled Tuesday after oil prices spiked to a record above $129 a barrel and a government report raised investors' concerns about...
NEW YORK — Wall Street tumbled Tuesday after oil prices spiked to a record above $129 a barrel and a government report raised investors’ concerns about the impact of inflation on consumer spending.
The Dow closed down 199.48, or 1.5 percent, at 12,828.68, logging its biggest daily slide since a 206-point drop on May 7.
Microsoft, one of the 30 Dow stocks, fell 70 cents to close at $28.76 a share. Boeing, also a Dow stock, slid $1.93 to $85.14.
Broader market indexes also retreated. The Standard & Poor’s 500 index shed 13.23 to 1,413.40, and the Nasdaq composite index dropped 23.83 to 2,492.26.
Most Read Business Stories
- Seattle artists worry potential sale of historic INS building could spell the end for their studios
- Fired after organizing, Starbucks baristas turned down a payout and took their bosses to court
- 6 Dr. Seuss books won't be published for racist images
- Frontier cancels flight, citing maskless passengers
- The penthouse atop Smith Tower is on the rental market for the first time
Crude jumped after OPEC’s president was quoted as saying his organization won’t raise its output before its next meeting in September. That sent a barrel of light, sweet crude to settle at a record $129.07 on the New York Mercantile Exchange.
Meanwhile, the Labor Department’s producer-price report, which indicated higher energy and food prices might be seeping into other parts of the economy, compounded the concerns raised by higher oil. The department said wholesale inflation edged up by 0.2 percent in April following a 1.1 percent jump in March, but outside of food and energy, prices rose by a faster 0.4 percent — double what analysts expected.
Wall Street is worried that a drop-off in consumer spending could ensue if wholesale price increases are passed along; consumer spending is critical because it accounts for more than two-thirds of the U.S. economy.
Analyst Stephen Leeb believes escalating oil prices have now replaced the health of the financial sector as the market’s biggest worry. He said rising energy creates a “very vicious circle” through the economy, and thinks the government must take some kind of action to bring down prices.
“Stock investors are watching oil, period,” said Leeb, whose Leeb Capital Management focuses on crude and its impact on equities. “The events that moved the market before revolved around write-offs and foreclosures, but all that’s changed.”