- The Washington Times - Monday, September 19, 2005

NEW YORK (AP) — Stocks plummeted yesterday 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 since 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.

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.

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 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 aftermath. The Fed’s policy announcement is expected this afternoon.

“I don’t see where they’re going to be able to back down with inflation increasing the way it is and oil rising,” said Bill Groenveld, head trader at VFinance Investments.

Mr. Groenveld also said Rita was another concern for the market as the storm approached the southern end of Florida en route to the Gulf of Mexico.

In corporate news, Nike, the world’s biggest shoemaker, said higher sales across the board helped lift its first-quarter profit 32 percent to easily beat Wall Street expectations. Worldwide future orders for products scheduled for delivery through January 2006 grew 11 percent to $4.9 billion, the company added. Nike surged $4.99 to $83.45.

Cruise-ship operator Carnival posted a 12 percent gain in third-quarter profit, as revenue swelled from increased ship capacity and ticket prices. The company also said while the hurricane has depressed results in the latest quarter, recent bookings remain strong and average prices are above the previous year. Carnival added $1.75 to $50.78.

Sirius Satellite Radio Inc. raised its projected full-year revenue by $5 million to $230 million, but the expanded forecast still fell short of analyst targets for $234.5 million.

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