Stocks plunge as oil touches record

Surging oil prices pulled stocks sharply lower for a third straight session Friday, with bland earnings at General Electric Co. and weak consumer data further dampening the economic outlook. The Dow Jones industrial average shed 396 points in the past three days.

“I don’t think you’re going to bring out a lot of buyers in the market after a week like this,” Jay Suskind, head trader at Ryan Beck & Co., said of escalating political turmoil in the Middle East, Iran and North Korea. “Uncertainty over the world situation is just too much for the market to have a solid up day.”

Crude futures reached an intraday record of $78.40 a barrel as Israel intensified its attacks on Lebanon, raising concerns about potential supply disruptions throughout the Middle East. Crude eventually settled at $77.03 a barrel, up 33 cents, on the New York Mercantile Exchange.

Retail sales fell unexpectedly in June, as did consumer confidence for July. Industrial and financial conglomerate GE’s second-quarter earnings matched analyst estimates, but the in-line results troubled investors already concerned that the recent spate of profit warnings was a sign the economy could be headed for a downturn.

The Dow tumbled 106.94, or 0.99 percent, to 10,739.35. The blue-chip index fell more than 121 points Wednesday and lost almost 167 points Thursday, and is just 21 points from turning negative for 2006.

Broader stock indicators also declined. The Standard & Poor’s 500 index dropped 6.09, or 0.49 percent, to 1,236.20; the Nasdaq composite index declined 16.76, or 0.82 percent, to 2,037.35, a 14-month low.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange.

Wall Street has slogged through a gauntlet of mounting uncertainties in recent weeks, with concerns about a potential slowdown in the global economy now exacerbated by increasing political turmoil throughout the world. The commotion sent investors running for cover, giving stocks their worst week this year.

For the week, the Dow slid 3.17 percent, the Nasdaq plunged 4.35 percent and the S&P 500 sank 2.31 percent.

Much of the market’s worries stemmed from the trend of rising interest rates worldwide, which is expected to curtail spending and foreign investment and drag on economic growth. Although the recent jump in oil prices have reinforced beliefs that the Federal Reserve will boost rates again at its Aug. 8 meeting, the early wave of downbeat earnings data has spurred fears that the economy is weakening and could buckle beneath higher lending costs.

Bonds steadied after this week’s runup, with the yield on the 10-year Treasury note unchanged at 5.07 percent from late Thursday. The 2-year yield, however, stood at 5.1 percent; the inversion of bond yields signaled expectations for slowing economic growth.

Overseas, Japan’s Nikkei stock average plunged 1.67 percent. Britain’s FTSE 100 dropped 1 percent, Germany’s DAX index fell 1.9 percent and France’s CAC-40 was lower by 1.48 percent.

NYSE volume of 1.72 billion shares trailed the 1.78 billion shares that changed hands Thursday.

The Russell 2000 index of smaller companies fell 6.05, or 0.88 percent, to 681.24.