Stocks decline as oil prices move up

NEW YORK – Surging oil prices and a weak dollar prompted a spate of profit taking Wednesday, pushing stocks slightly lower in light holiday-week trading. However, the minimal losses gave investors hope that Wall Street’s yearend rally would still extend into January.

Crude oil futures moved higher after the Energy Department’s latest weekly petroleum inventory report showed a dropoff in the nation’s crude reserves, while reports of explosions in the Saudi Arabian capital of Riyadh prompted a sharp rise on top of that. A barrel of light crude settled at $43.64, up $1.87, on the New York Mercantile Exchange.

The dollar fell to its fifth straight record low against the euro – good news, in the short term, for American exporters and tourism, but problematic for inflation should the dollar fail to gain ground in the long term.

“I think you’re definitely seeing some money being moved off the table today,” said Steve Neimeth, senior vice president and portfolio manager at AIG SunAmerica. “But the economic data we’ve seen over the past month has been positive, and there’s a lot of reasons to stay optimistic.”

The Dow Jones industrial average fell 25.35, or 0.23 percent, to 10,829.19.

Broader stock indicators were fractionally lower. The Standard & Poor’s 500 index was down 0.09, or 0.01 percent, at 1,213.45, and the Nasdaq composite index lost 0.19, or 0.01 percent, to 2,177.00.

All three major indexes reached 3 1/2 -year highs on Tuesday as Wall Street extended its “Santa Claus” rally. However, with many investors on the sidelines during the holidays, speculative traders could swing the markets in any direction, and analysts said it would be difficult to determine any short-term trends for Wall Street until next week.

The Russell 2000 index of smaller companies was down 1.23, or 0.19 percent, at 653.34. Overseas, Japan’s Nikkei stock average fell 0.37 percent.