Arrow-right Camera
The Spokesman-Review Newspaper

The Spokesman-Review Newspaper The Spokesman-Review

Spokane, Washington  Est. May 19, 1883
Cloudy 55° Cloudy
News >  Business

Rally stalls on oil fears, profit-taking

Associated Press

Oil worries and a raft of economic uncertainties plagued Wall Street on Thursday, sending stocks lower as investors collected profits after the strong gains of the previous two sessions.

Oil prices edged higher after after a report said that oil producers in the Gulf of Mexico continued to struggle to resume full operations after Hurricane Katrina.

An inventory report from the Energy Department showed the nation’s oil and gasoline stockpiles fell considerably, although the losses were less than Wall Street expected. A barrel of light crude settled at $64.49, up 12 cents, on the New York Mercantile Exchange.

Yet with oil remaining in the mid-$60 per barrel range, investors were concerned that both corporate earnings and consumer spending would drop due to high energy costs.

Investors also worried that the Federal Reserve would continue to raise interest rates at its Sept. 20 meeting. Despite Katrina’s devastation and death toll, the harm to the U.S. economy was less than originally expected, and hopes of a halt in rate hikes dimmed.

“I think the Fed’s in a box here, and they really don’t have a choice but to raise rates,” said Michael Chren, portfolio manager for the Allegiant Funds. “Rebuilding from the hurricane will be an economic positive next year, you have concerns about inflation, and you have the housing bubble. I don’t think they can stop.”

The Dow Jones industrial average fell 37.57, or 0.35 percent, to 10,595.93. The Dow had gained 186.13 in the previous two sessions.

Broader stock indicators also lost ground. The Standard & Poor’s 500 index slid 4.68, or 0.38 percent, to 1,231.68, and the Nasdaq composite index dropped 6.00, or 0.28 percent, to 2,166.03.

Bonds held steady after two sessions of selling, with the yield on the 10-year Treasury note remaining at 4.14 percent from late Wednesday. The dollar was mixed against most major currencies, while gold prices moved higher.

Investors’ preoccupation with oil and interest rates caused them to look past a surprising drop in first-time jobless claims. The Labor Department reported the number of new unemployment claims fell to 319,000 last week, 1,000 less than the prior week. More claims, however, are expected in the coming weeks from workers displaced by the Gulf Coast disaster.

Declining issues outnumbered advancers by more than 5 to 3 on the New York Stock Exchange, where volume came to 1.45 billion shares, compared with 1.5 billion on Wednesday.

The Russell 2000 index of smaller companies fell 3.85, or 0.57 percent, to 673.47.

Overseas, Japan’s Nikkei stock average fell 0.58 percent. In Europe, Britain’s FTSE 100 was down 0.47 percent, France’s CAC-40 lost 0.45 percent for the session, and Germany’s DAX index rose 0.09 percent.

The Spokesman-Review Newspaper

Local journalism is essential.

Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.

Active Person

Subscribe now to get breaking news alerts in your email inbox

Get breaking news delivered to your inbox as it happens.