Oil Production News Reverses Stock Prices

The Dow industrials’ assault on 9,000 was interrupted Monday amid concerns that efforts by the world’s top petroleum exporters to boost oil prices will aggravate inflation and trim corporate profits.

The Dow Jones industrial average sank sharply in the final minutes of trading to finish the day down 90.18 at 8,816.25. That erased nearly a third of the Dow’s 300-point gain during its five record-setting sessions last week.

While blue-chip stocks struggled, broad-market indexes were mixed, and the American Stock Exchange composite index reached its fourth-straight record close.

“Yes, the news of the higher oil prices played into this market,” said Ricky Harrinton, technical analyst at Interstate/Johnson Lane in Charlotte, N.C. “But people aren’t entirely pulling out of this market. The supply-demand equation is still in favor of the bull.”

With no new economic news released Monday, Wall Street focused on rising oil prices. In recent days, many of the world’s leading exporters have said they will reduce oil production.

That follows the collapse of prices in recent months, after OPEC agreed in November to increase its stated output ceiling by 10 percent. Last week, oil prices slumped to a 10-year low.

For stock investors, concerns emerged quickly on Monday that higher oil prices could revive inflation and hurt corporate earnings by raising manufacturers’ energy costs.

The Dow Jones transportation average was down more than 2 percent, with the biggest declines coming airline stocks, like AMR and Delta.

“The rise in the price of oil certainly will hurt areas of the economy,” said Larry Wachtel, market analyst at Prudential Securities. “But it doesn’t mean that inflation is around the corner.”

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

NYSE

Circus Circus Enterprises, fell 3 to 21-3/4.

Hilton Hotels, fell 3/4 to 32-7/8.

The companies confirmed that talks for their $2.8 billion deal have ended.

Delta Airlines, fell 2-11/16 to 115-3/4.

Alaska Air, fell 4-1/8 to 52-13/16.

Southwest Airlines, fell 1-3/4 to 28-3/8.

UAL, fell 1-13/16 to 88-1/16.

NASDAQ

Ultra Pac, rose 8-5/16 to 15.

Ivex Packaging Corp. will buy Ultra Pac, a maker of plastic containers and packaging for the food industry, for about $63.6 million in cash.

Infonautics, rose 1-1/4 to 5-5/8.

America Online signed a two-year contract with Infonautics to integrate Infonautics’ electric library service into the main screens of AOL’s WorkPlace and Research & Learn channels. Infonautics provides online reference services.