- The Washington Times - Wednesday, July 8, 2009

NEW YORK | Falling oil prices are becoming another sign of investors’ deflating hopes for a speedy economic recovery.

Major stock indexes skidded 2 percent Tuesday as crude fell for the fifth straight day.

Falling oil can help the economy by reducing costs, but investors are looking to the latest slide as an unwelcome prediction that demand for energy and basic materials will remain weak as the recession lingers. The Dow Jones Industrial Average fell 161 points to its lowest close since late April.

Trading volume remained light amid a dearth of news about the economy this week and as investors await the beginning of the second-quarter earnings season, which starts Wednesday with Alcoa Inc. but won’t pick up speed until next week.

“Uncertainty has crept back into the picture,” said Carl Beck, partner at Harris Financial Group. “We started to get some data that put a damper on some of the optimism that had been growing about the economic recovery, and that sort of put everything on hold until we start hearing from companies.”

The Dow fell 161.27, or 1.9 percent, to 8,163.60. It was the lowest finish for the blue chips since April 28.

The broader Standard & Poor’s 500 Index fell 17.69, or 2 percent, to 881.03, its lowest finish since May 1. The Nasdaq Composite Index lost 41.23, or 2.3 percent, to 1,746.17, the lowest close since May 27.

Oil tumbled from an eight-month high reached last week, on concerns that a weak economy will dampen demand for energy.

Light, sweet crude fell $1.12 to settle at $62.93 a barrel on the New York Mercantile Exchange, helping to send Exxon Mobil Corp. down $1.54, or 2.3 percent, to $66.56, while ConocoPhillips lost 84 cents, or 2.1 percent, to $39.99.

Despite the overall weakness in the market Tuesday, there was some buying of health care stocks after an analyst said the White House had signaled it would be open to negotiation on a public insurance option in its drive to reform health care, which would benefit managed-care companies.

Aetna Inc. jumped more than 6 percent, adding $1.53 to $25.94. Cigna Corp. rose more than 7 percent, gaining $1.77 to $25.24.

Bond prices were mostly higher as investors looked for safety. Results from an auction of $35 billion in three-year notes were mixed, but demand was decent.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.46 percent from 3.51 percent late Monday.

In other trading, the Russell 2000 index of smaller companies fell 9.78, or 2 percent, to 484.25.

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