Stocks drop on weak economic data
A sharp rise in oil prices sent stocks sliding Wednesday as investors nervously eyed new data showing that high energy prices have started to slow the economy. Profit-taking in the technology sector also weighed heavily on the markets.
Crude futures surged as refinery recovery remained sluggish on the Gulf Coast and the government announced a sharp drawdown in the nation’s oil reserves. A barrel of light crude settled at $65.09, up $1.98 on the New York Mercantile Exchange.
Wall Street also was concerned with nearly flat industrial output figures from the Federal Reserve — due to the approach of Hurricane Katrina — and a 2.1 percent drop in retail sales. However, the Commerce Department noted that with auto sales removed, other retail sales rose 1 percent, though much of that was due to a rise in gasoline prices.
The market’s losses were magnified due to light trading volume, as many investors simply held off making large bets and hoped the Fed, which meets Tuesday, could shed more light on the nation’s economic situation.
“There seems to be a lot of uncertainty about what the Fed is going to say,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “It seems a little early, given the meeting is next week, but I do think people are just waiting around for better news.”
The tech-focused Nasdaq composite index fell 22.42, or 1.03 percent, to 2,149.33.
Other stock indicators also fell. The Dow Jones industrial average dropped 52.54, or 0.5 percent, to 10,544.90, while the Standard & Poor’s 500 index slid 4.04, or 0.33 percent, to 1,227.16.
Bonds edged lower, with the yield on the 10-year Treasury note rising to 4.16 percent from 4.13 percent late Tuesday. The U.S. dollar was mixed against other major currencies in European trading. Gold prices were higher.
After a surprising runup in stock prices in the week after Katrina, bolstered by data suggesting that the hurricane’s economic impact would be limited, investors have become tentative — especially as oil prices have started climbing once again.
Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 1.98 billion shares, down from 2.08 billion shares traded Tuesday.
The Russell 2000 index of smaller companies fell 6.78, or 1.01 percent, to 666.35.
Overseas, Japan’s Nikkei stock average fell 0.52 percent. In Europe, Britain’s FTSE 100 closed up 0.18 percent, France’s CAC-40 was up 0.38 percent for the session, and Germany’s DAX index was up 0.19 percent.