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Oil prices pressure stocks

2 min read

NEW YORK (AP) – Uneasy investors sold stocks mostly lower Tuesday as oil prices climbed above $51 per barrel, creating new worries that rising energy costs would curb consumer spending and corporate profits. Only the Nasdaq composite index managed a small gain. The major indexes did not see a major oil-based selloff, as they had in the past, as crude futures posted a new record closing price. A barrel of light crude closed at $51.09, up $1.18, on the New York Mercantile Exchange, after reaching a new intraday record high of $51.29. Nonetheless, rising energy prices made investors anxious enough that they decided to collect profits after the market’s substantial gains in four of the last five sessions.

“We’re now talking about higher energy prices through the winter months, and futures for December and January have moved up quite dramatically,” said Chris Wolfe, global head of equities for J.P. Morgan Private Bank. “What that suggests is that maybe this is a longer break on the economy’s growth than we’ve been anticipating.”

The Dow Jones industrial average fell 38.86, or 0.4 percent, to 10,177.68. Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index was down 0.69, or 0.1 percent, at 1,134.48, and the Nasdaq composite index gained 3.10, or 0.2 percent, to 1,955.50.

As oil prices climbed, investors were concerned that the economic “soft patch” that plagued Wall Street this summer might continue through the fourth quarter and that the market’s usual year-end rally might be muted, especially if oil prices remain in the $50 per barrel range.

“I think there’s some money that really wants to come into the market, but there’s some hesitancy out there because of these uncertainties,” said Michael Murphy, head trader at Wachovia Securities in Baltimore. “Third-quarter numbers will be coming out here starting this week, and we have the jobs figures on Friday, and that will move things along one way or the other.”

Friday’s job creation report from the Labor Department is always closely watched on Wall Street, but with recent economic data pointing to uncertainty in the economic recovery, the report will take on even more importance, analysts said.

Adding to investors’ concerns was a disappointing report from the Institute for Supply Management, which said its service sector index fell to 56.7 in September from 58.2 in August.

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