Stocks sag on spike in oil prices

Stocks sagged Thursday, ending a lackluster quarter in negative range as investors weighed rising U.S. incomes and consumer spending against lofty oil prices, which rose following an investment bank’s suggestion that energy was in the early stages of a bull market.

The report from Goldman Sachs warned oil was entering a “super spike” period that could drive prices as high as $105 per barrel, but many on Wall Street were skeptical about the call. The only thing that could take crude to such high levels would be a major disruption in supply from Iran, Iraq or Saudi Arabia, which seems unlikely at this point, said Tracy Herrick, chief economist for the Private Bank of the Peninsula, in Palo Alto, Calif.

The report seemed to have an impact on trading, nonetheless; crude futures surged $1.41 to $55.30 per barrel on the New York Mercantile Exchange — difficult for stock investors to ignore.

“The important thing today, the only thing of significance, is the oil figure,” Herrick said. “That is the most troubling thing for the market because it has a long-term negative effect on the economy and could act as a drag on profits. Everything else indicates the economy is in glide path for continued strength. The increases in interest rates so far have had no impact on the economy, so that’s not an issue. Oil is the issue.”

The Dow Jones industrial average was down 37.17, or 0.35 percent, at 10,503.76, pressured in part by American International Group Inc. and Johnson & Johnson. For the quarter and the year, the Dow has lost 2.59 percent.

The broader gauges were also lower. The Standard & Poor’s 500 index slipped 0.82, or 0.07 percent, to 1,180.59, ending its worst quarter since 2002 with a 2.59 percent loss. The Nasdaq composite index fell 6.44, or 0.32 percent, to 1,999.23, down 8.10 percent since the year began.

Treasurys rose for a third day, with the yield on the 10-year note dropping to 4.48 percent, from 4.55 percent late Wednesday. The U.S. dollar fell against other major currencies. Gold prices rose.

Advancers outnumbered declining issues by about 5 to 4 on the New York Stock Exchange.

The Russell 2000 index, which tracks smaller company stocks, was up 0.17, or 0.03 percent, at 615.07.

Overseas, Japan’s Nikkei stock average added 0.89 percent. In afternoon trading in Europe, France’s CAC-40 rose 0.08 percent, Britain’s FTSE 100 slid 0.13 percent and Germany’s DAX index inched up 0.03 percent.