- The Washington Times - Wednesday, August 24, 2005

NEW YORK (AP) — Stocks sank amid increasing pessimism on Wall Street yesterday, shedding early gains after oil prices reached another record high and a mix of data provided conflicting views on the economy.

The surge in crude prices wiped out the advance that followed the Energy Department’s latest inventory report, which showed a strong buildup of heating oil and distillate stocks.

Concerns about a drawdown in crude oil and a tropical storm threatening oil facilities pushed crude futures to a new record.

A barrel of light crude surged $1.61 to settle at $67.32 on the New York Mercantile Exchange, surpassing the previous record settlement of $66.86 per barrel on Aug. 12.

The market’s earlier momentum grew out of the Commerce Department’s latest report on new-home sales, which rose to an annualized 1.41 million units, better than the 1.328 million home sales expected.

But the government also reported a sharp decline in orders for big-ticket manufactured goods — leading investors to wonder whether an economic slowdown was imminent.

The Dow Jones Industrial Average fell 84.71, or 0.81 percent, to 10,434.87.

Broader stock indicators also lost ground. The Standard & Poor’s 500 lost 8, or 0.66 percent, to 1,209.59 — falling back into negative territory for the year. The Nasdaq Composite Index dropped 8.34, or 0.39 percent, to 2,128.91.

Volume was light, which is typical for late August, but that only magnified stocks’ volatility and possibly exaggerated Wall Street’s reaction to oil prices and the economic news.

Bonds traded in a narrow range throughout the day, with the yield on the 10-year Treasury note steady climbing to 4.17 percent from 4.18 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices fell.

While worries about high oil and gasoline prices have already prompted warnings from much of the retail sector, high-end luxury retailers have yet to be affected. Coach Inc. climbed $1.35 to $33.99 after the handbag and leather-goods maker said its first-quarter profits would exceed Wall Street’s forecasts.

Poultry producer Pilgrim’s Pride Corp. reaffirmed its earnings outlook after rival Sanderson Farms Inc. posted a 29 percent drop in profits on Tuesday.

Pilgrim’s Pride rose 11 cents to $31.21 while Sanderson Farms gained 63 cents to $36.40 after falling 7.6 percent Tuesday.

Google Inc. added $2.99 to $282.57 after the Internet search company said it would create an instant messaging and voice chat program to rival popular chat programs from Time Warner Inc.’s America Online, Yahoo Inc. and Microsoft Corp.

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