Posted on: Wednesday, October 6, 2004

Record oil prices give stock market the jitters

By Michael J. Martinez
Associated Press

NEW YORK — Uneasy investors sold stocks mostly lower yesterday as oil climbed above $51 a barrel, creating new worries that rising energy costs might curb consumer spending and corporate profits. Only the Nasdaq composite index managed a small gain.

A barrel of light crude posted a record closing of $51.09, up $1.18, on the New York Mercantile Exchange, after an intraday high of $51.29. Anxious investors decided to collect profits after the market's substantial gains in four of the last five sessions.

"We're now talking about higher energy prices through the winter months, and futures for December and January have moved up quite dramatically," said Chris Wolfe, global head of equities for J.P. Morgan Private Bank. "What that suggests is that maybe this is a longer break on the economy's growth than we've been anticipating."

Investors were concerned that the economic "soft patch" that plagued Wall Street this summer might continue through the fourth quarter, especially if oil prices remain in the $50 range.

"I think there's some money that really wants to come into the market, but there's some hesitancy out there because of these uncertainties," said Michael Murphy, head trader at Wachovia Securities in Baltimore. "Third-quarter numbers will be coming out here starting this week, and we have the jobs figures on Friday, and that will move things along one way or the other."

NYSE declining issues barely outnumbered advancers, on volume of 1.78 billion shares, compared with 1.94 billion Monday.