Oil prices pressure stocks
The Associated Press
Oil prices climbed close to $51 per barrel and kept stocks mixed Oct. 5 as investors worried that rising energy costs would dampen a widely expected fourth quarter rally.
Wall Street was uneasy but not panicky as a barrel of light crude was quoted at a record high $50.80, up 89 cents, on the New York Mercantile Exchange. As rising energy prices raised concerns about consumer spending and corporate profits, investors decided it was time to collects profits after the market’s substantial gains in four of the last five sessions.
“We’re now talking about higher energy prices through the winter months, and futures for December and January have moved up quite dramatically,” said Chris Wolfe, global head of equities for J.P. Morgan Private Bank. “What that suggests is that maybe this is a longer break on the economy’s growth than we’ve been anticipating.”
Adding to investors’ worries was a disappointing report from the Institute for Supply Management, which said its service sector index fell to 56.7 in September from 58.2 in August. The reading was lower than the 59 expected by Wall Street. A figure over 50 represents expansion in the service sector, but the latest number represented a slowdown in growth.
At midday Oct. 5, the Dow Jones industrial average fell 21.38, or 0.2 percent, to 10,195.16. Broader stock indicators were narrowly higher. The Standard & Poor’s 500 index was up 0.50, or 0.04 percent, at 1,135.67, and the Nasdaq composite index gained 3.32, or 0.2 percent, to 1,955.72.
As oil prices climbed, investors were concerned that the economic “soft patch” that plagued Wall Street this summer might continue through the fourth quarter and that the market’s usual year-end rally might be muted, especially if oil prices remain in the $50 per barrel range.
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