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News >  Business

Markets slide on high oil, gas prices

Associated Press

Stocks plummeted Monday as heightened fears of another hurricane hitting the Gulf Coast sent oil prices racing past $67 a barrel and investors grew anxious about the Federal Reserve’s upcoming interest-rate meeting.

Wall Street saw some bright spots in merger activity and strong earnings from Nike Inc. and Carnival Corp., but the market became increasingly uneasy as surging energy prices threatened consumer spending. Investors also awaited the Fed’s decision whether to raise rates or halt its string of increases to mitigate an economic slide following Hurricane Katrina.

With an intensifying Tropical Storm Rita nearing Florida’s tip and poised to hammer the Gulf Coast just weeks after Katrina’s devastation, the market retreated heavily late in the session amid light trading volume.

“Front and center would be concerns of the storm approaching tomorrow (Tuesday), of which you’re seeing crude oil trading up $4,” said Steven Goldman, chief market strategist at Weeden & Co., who noted a steep decline in oil prices at midday.

Crude oil made its biggest one-day gain ever, even as OPEC neared a consensus on selling 2 million additional barrels a day to offset a potential supply shortage from recent refinery shutdowns. On the New York Mercantile Exchange, a barrel of light crude jumped $4.39 to $67.39, as gasoline futures climbed 24 cents to $2.04 a gallon.

At the close of trading, the Dow Jones industrial average dropped 84.31, or 0.79 percent, to 10,557.63. The Dow lost as much as 120.69 during the session.

Broader stock indicators also declined. The Standard & Poor’s 500 index fell 6.89, or 0.56 percent, to 1,231.02, and the Nasdaq composite index sank 15.09, or 0.7 percent, to 2,145.26.

Bonds rose, with the yield on the 10-year Treasury note sliding to 4.25 percent from 4.27 percent on Friday. The U.S. dollar was mixed against other major currencies in European trading, while gold prices gained a second day and set a fresh 17-year record.

Although Wall Street is uncertain about what the Fed’s decision is likely to be, many analysts are predicting the central bank will continue lifting rates to stem inflation and will keep that as its main priority despite the widespread economic ripple left in Katrina’s wake. The Fed’s policy announcement is expected this afternoon.

Declining issues outpaced advancers by 11 to 5 on the New York Stock Exchange, where volume of 1.56 billion shares fell short of the 2.55 billion shares traded at the same point Friday, when options trading increased the number of shares that changed hands.

The Russell 2000 index of smaller companies fell 4.96, or 0.74 percent, to 667.02.

Overseas, Britain’s FTSE 100 added 0.40 percent, Germany’s DAX index lost 1.21 percent, and France’s CAC-40 was lower by 0.08 percent. The markets in Japan were closed Monday for a national holiday.

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