- The Washington Times - Tuesday, August 5, 2008

NEW YORK (AP) | Wall Street markets fell Monday in an erratic session dominated by worries about inflation - which were somewhat soothed by a plunge in oil prices that took crude to its lowest level in three months.

Light, sweet crude closed down $3.69, or 2.9 percent, to settle at $121.41 a barrel on the New York Mercantile Exchange. Oil’s retreat was welcome news to a stock market that initially sold off after the Commerce Department said an inflation gauge tied to consumer spending had surged 0.8 percent in June - the biggest jump since it gained 1 percent in February 1981.

The Dow Jones Industrial Average fell 42.17, or 0.37 percent, to 11,284.15 as energy and materials stocks declined after a broad drop in commodities. The Dow had been down more than 100 points in early trading.

Broader stock indicators showed steeper declines. The Standard & Poor’s 500 Index fell 11.30, or 0.90 percent, to 1,249.01, and the Nasdaq Composite Index declined 25.40, or 1.10 percent, to 2,285.56.

Many investors appeared to trade cautiously ahead of a Federal Reserve policy meeting on Tuesday. The central bank is expected to keep interest rates steady at 2 percent, but the market will be keenly interested in the Fed’s economic assessment statement that will accompany its rate decision.

Investors seemed unmoved by a Commerce Department report that orders to U.S. factory jumped at the fastest pace in six months in June. The report reflected increases in petroleum prices and heavy demand for military equipment. Orders rose by 1.7 percent in June, more than double what had been expected. It was the biggest gain since December.

Meanwhile, corporate earnings reports for the second quarter are still arriving. Cisco Systems Inc., News Corp. and Procter & Gamble Co. are scheduled to report results Tuesday.

Cisco ended unchanged at $21.99; News Corp. advanced 17 cents to $14.57; and P&G rose 87 cents to $65.82.

Exxon Mobil Corp. skidded $3.12, or 3.91 percent, to $76.60, while Chevron Corp. slipped $1.51, or 1.79 percent, to $82.80, reacting to the drop in oil prices.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to a relatively light 4.39 billion shares, down from 4.54 billion shares traded Friday.

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