- The Washington Times - Tuesday, June 3, 2008

NEW YORK (AP) - Wall Street retreated Monday on more signs of economic weakness and executive shake-ups at two major banks - reminders of the ongoing fallout from the credit crisis. The Dow Jones Industrial Average fell more than 130 points.

Two key economic reports indicated that the economy is still struggling. As expected, the Institute for Supply Management’s manufacturing index for May showed its fourth straight monthly decline, while the Commerce Department said construction spending dipped in April for the sixth time in seven months due to a drop in home building.

The retreat followed a pattern of the past month when investors, looking to ignite a rally, quickly backpedal with any hint of bad economic or corporate news. One such spoiler has been the record pace of oil prices, which has not given investors much respite. After slipping last week, light, sweet crude for July delivery rose 41 cents to settle at $127.76 a barrel on the New York Mercantile Exchange.

The Dow Jones Industrial Average fell 134.50, or 1.06 percent, to 12,503.82, after gaining last week on better-than-expected economic data and a pullback in oil prices. The blue-chip index had shed more than 200 points during the session.

Broader stock indicators also dropped Monday. The S&P; 500 Index fell 14.71, or 1.05 percent, to 1,385.67. The Nasdaq Composite Index fell 31.13, or 1.23 percent, to 2,491.53.

Government bonds rose as stocks pulled back. The 10-year Treasury note’s yield, which moves opposite its price, fell to 3.97 percent Monday from 4.06 percent late Friday. The yield was unchanged in late trading.

High energy costs have been hurting both companies and consumers, who still face falling home prices. Real estate data company Radar Logic said Monday that only one of the 25 metropolitan areas it tracks, Milwaukee, saw a rise in real estate values in March.

Treasury Secretary Henry M. Paulson Jr., during a speech in Abu Dhabi, said there are no “quick remedies” for rising energy prices, which he attributed to high demand and limited supplies. Mr. Paulson also said the housing and capital markets are working through their issues, but he expects that process to continue “for some time.”

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