Oil Puts Damper on Stocks
Oil prices ended above $46 a barrel for the first time Friday, rattling Wall Street traders already nervous over reports of a record U.S. trade deficit and weaker-than-expected consumer sentiment.
Bond yields retreated and the dollar sank.
An explosion and fire at a BP refinery in Indiana created more worries in the oil market, already on edge over possible supply disruptions in Iraq and Venezuela. Traders are concerned about the threat of unrest in Venezuela during this weekend’s referendum on the rule of President Hugo Chavez as well as the possibility that Iraqi rebels will target oil pipelines after U.S. forces stormed the holy city of Najaf.
On the New York Mercantile Exchange, crude for September delivery jumped $1.08 a barrel to $46.58 -- the loftiest level in the 21 years that oil futures have traded on the exchange.
On Wall Street, the skyrocketing price of oil offset a positive outlook from computer maker Dell, which rose more than 4% after giving a better-than-expected third-quarter outlook.
High oil prices put a damper on stock prices as investors worry about the effect on consumers’ wallets and companies’ profit margins.
“Unless you see a pullback in oil, it’s going to be hard to sustain any rally,” said Peter Boockvar, equity strategist at Miller Tabak & Co.
But energy stocks benefited. Exxon Mobil rose 36 cents to $44.92, ChevronTexaco gained $1.23 to $95.60, and ConocoPhillips rose 90 cents to $73.47.
And some retailers apparently haven’t been hurt by the energy prices yet. Kohl’s, a low-price department-store chain, added $2.40 to $46.10 after the company reported a 39% surge in second-quarter profit.
The Dow Jones industrial average rose 10.76 points, or 0.1%, at 9,825.35. The Standard & Poor’s 500 index gained 1.57 points, or 0.2%, to 1,064.80. The tech-laden Nasdaq composite index added 4.73 points, or 0.3%, to 1,757.22.
Advancers outnumbered decliners on the New York Stock Exchange by about 3 to 2. Trading was slow.
For the week, the Dow and the S&P; 500 advanced 0.1%, while Nasdaq fell 1.1%.
The yield on the benchmark 10-year Treasury note fell to 4.23% from Thursday’s close of 4.25% as trade-deficit data cast fresh doubts on the economy’s recovery and its ability to draw foreign capital. The dollar fell against the yen and the euro.
