Stocks Fall and Oil Gains for Second Day on Libyan Violence
The Dow Jones Industrial Average ($INDU) lost 107 points, or 0.9%, to close at 12,106. The blue-chip index was off as much as 149 points in midday trading before paring its loss. The broader S&P 500 ($INX) fell 8 points, or 0.6%, to finish at 1,307. The tech-heavy Nasdaq Composite ($COMPX) declined 33 points, or 1.2%, to settle at 2,723.
Forces loyal to Libyan leader Moammar Gadhafi continued their assault on anti-government protesters, leading to widespread chaos and shooting in the streets of the Libyan capital, Tripoli, the Associated Press reported. Nearly 300 people have been killed in the uprising so far, according to the New York-based Human Rights Watch.
The increasing violence in Africa's third-largest oil producing nation sent oil prices soaring again. Benchmark crude traded on the New York Mercantile Exchange rose another $3.07, or 3.2%, to close at $98.49 a barrel, its highest close since October 2008. Contracts broke above $100 a barrel at one point during the session. Crude oil hasn't closed above the triple-digit level since September 2008.
Libya is the world's 15th-largest exporter of crude oil, contributing 2% of global daily output. Fears that anti-government unrest could spread to other oil-producing nations in the region have caused crude oil futures to spike nearly 14% in less than a week.
The flight to safer assets punished equities around the globe, as did some disappointing corporate news. Hewlett-Packard weighed most heavily on the Dow after the tech giant issued a weak revenue forecast late Tuesday. The blue-chip index's decline was tempered somewhat by energy giants Exxon Mobil (XOM) and Chevron (CVX), shares of which rose sharply, thanks to the spike in oil prices.
The flight to safety also boosted gold prices, which notched a seven-week high Wednesday. Gold futures traded on the Comex division of the NYMEX rose $9.40 or 0.6%%, to finish at $1,411 an ounce.
In other corporate news, Lowe's (LOW), the nation's second-biggest home improvement retailer after Home Depot (HD), said fourth-quarter profit rose 39% to beat Wall Street's forecast, but a disappointing outlook hurt shares.
In U.S. economic news, existing-home sales rose 2.7% in January, but the increase was due to a rising number of foreclosures and all-cash deals rather than growth in the number of first-time home buyers.