Dow Tumbles As Oil Prices Fuel Inflation Fears

Stocks dropped sharply late in the session Wednesday, sliding as oil rose to its highest level since the Persian Gulf War and aggravated inflation fears.

The Dow Jones industrial average fell 51.18 to 6,549.48 after spending much of the day slightly below Tuesday’s record-high close, which was the first ever above 6,600 for the blue-chip barometer.

Broader measures turned mostly negative with bonds at midafternoon, wiping out some modest morning gains.

“Some investors are looking for reasons to take profits, but at the same time, some are looking for opportunities to put a little more money to work,” said Charles G. Crane, director of research at Spears, Benzak, Salomon & Farrell. “That’s why the volatility will continue to be as pronounced as it has been the last three-to-four weeks.

Declining issues outnumbered advancers by a narrow margin on the New York Stock Exchange, where volume was heavy at 556.57 million shares as of 4 p.m., up from Tuesday’s 538.19 million.

Some of the stocks that moved substantially or traded heavily Wednesday:

NYSE

Motorola, up 2-1/8 at 63-5/8.

Morgan Stanley upgraded its rating on the telecommunications equipment maker’s stock to “outperform” from “neutral,” the Dow Jones News Service reported, citing a contact at the investment firm.

Service Corp. International, up 1-3/4 at 29-3/8.

Loewen Group, down 4-1/8 at 36-3/4.

Houston-based Service Corp. withdrew its bid to acquire rival funeral-home operator Loewen for $2.7 billion bid, or $45 a share.

NASDAQ

Netscape Communications, down 10-7/8 at 47-7/8.

Deutsche Morgan Grenfell analyst J. William Gurley cut his rating to accumulate from buy, the Dow Jones News Service reported. Gurley said Netscape’s fourth-quarter results may come in slightly higher than forecasts, but not by as much as some have come to expect.

Shiva, down 15-5/8 at 19-1/4.

The computer networking concern expects to post fourth-quarter earnings well below expectations. Shiva, based in Bedford, Mass., issued the cautious outlook late Tuesday, blaming the loss of a $5 million order from IBM and a reduction in inventories.

Alternative Resources, down 2 at 14-3/4.

The provider of technical staffing services expects to report disappointing fourth-quarter earnings. Alternative Resources, based in Lincolnshire, Ill., said late Tuesday its results were hurt by lower margins related mainly to large accounts.

Ansys, down 4-7/8 at 8.

The Houston, Pa., maker of engineering software expects to post fourth-quarter revenue below estimates because of weaker-than-expected sales of its core products and services in several European and Asian countries.