Stocks edge lower as oil prices spike again
BY ASSOCIATED PRESS March 8, 2011 3:34PM
A trader works on the floor of the New York Stock Exchange. | AP Photo/Richard Drew
NEW YORK (AP) — Stocks fell Monday, giving up earlier gains, as higher oil prices weighed on the market. Oil hit a two-year high early in the day, nearing $107 a barrel, but pulled back slightly by mid-morning.
The market has been shaken in recent weeks by the uprising in Libya and its effect oil prices. A prolonged cut in crude exports from the OPEC nation could hurt the economic recovery by raising transportation and manufacturing costs. Benchmark West Texas Intermediate crude rose 78 cents to $105 per barrel.
Stocks had started higher on news of two corporate deals. Hard drive maker Western Digital Corp. jumped 16 percent after announcing plans to buy Hitachi Global Storage Technologies for $4.3 billion. French fashion conglomerate LVMH Moet Hennessy Louis Vuitton says it will buy Italian jeweler Bulgari SpA for $6 billion.
Investors fear that unrest in the Middle East might spread to Saudi Arabia. With little economic news and no earnings announcements planned today, the market’s movements are closely tied to news from the region.
“The market is going to have to sort out what’s fact and what’s rumor,” said Quincy Krosby, chief marketing strategist for Prudential Financial. “They are saying, ‘how high can the prices go, and more importantly for how long.’”
The Dow Jones industrial average fell 64 points, or 0.5 percent, to 12,105.
The Standard & Poor’s 500 index fell 10 points, or 0.7 percent, to 1,311. The Nasdaq composite fell 43 points, or 1.5 percent, to 2,759.
Starbucks rose 2 percent after CEO Howard Schultz told the Wall Street Journal the company is looking for companies to acquire. 3M Co. rose 0.5 percent, the biggest gain in the Dow 30. Walt Disney Co. fell the most, 1.2 percent.
This afternoon, the Federal Reserve reports on how much consumers borrowed in January. Analysts expect the report to show that borrowing rose at an annual rate of $3.5 billion after rising at a $6.1 billion rate in December.
Borrowing is just 0.7 percent higher than the three-year low hit in September. Investors may take it as a positive sign if borrowing exceeds expectations. The report is due out at 3 p.m. EST.