Posted on: Wednesday, May 11, 2005

Stocks take a tumble as Delta sounds alarm

By Michael J. martinez
Associated Press

NEW YORK — Stocks tumbled yesterday as rising crude oil prices prompted Delta Air Lines Inc. to warn of possible bankruptcy and Wall Street's rumor mill chewed over the possibility of hedge fund losses due to steep investments in troubled General Motors Corp.

Delta's news, which led many investors to wonder whether other companies may fall victim to high energy costs, added to Wall Street's now-chronic concerns that high oil prices may lead to an economic slowdown, inflation, or a worst-case combination of both.

The bond market rallied as stocks dropped, with the yield on the 10-year Treasury note skidding to 4.21 percent, down from 4.28 percent late Monday.

The dollar was mostly lower against other major currencies, while gold prices rose.

Crude oil prices were volatile ahead of today's government energy inventory report, which often moves crude prices substantially. After rising as high as $53.10, a barrel of light crude for June delivery settled at $52.07, up 4 cents, on the New York Mercantile Exchange.

In the financial sector, Morgan Stanley fell $1.33 to $49.42 as Chief Executive Phil Purcell told investors that the Discover card spinoff would hurt revenues and that the second quarter was shaping up to be difficult...

Declining issues outnumbered advancers by more than 5 to 2 on the Big Board, where consolidated volume amounted to 1.95 billion shares, compared with 1.88 billion on Monday.

The Russell 2000 index was down 7.87, or 1.31 percent, at 595.04.