Dow off 168 as rising crude prices slam stocks

Turmoil in Libya, Bahrain and Iraq push oil prices above $100 after hours. The increase could hit the economy, Fed Chairman Ben Bernanke warns. Gold hits a new high. The SEC charges a former Goldman Sachs director with insider trading.

By Charley Blaine Mar 1, 2011 2:12PM
Charley BlaineUpdated: 9:56 p.m. ET

Stocks slumped badly today as U.S. crude oil topped $100 a barrel in electronic trading and investors feared that the economic recovery could stall out.

The sell-off was accelerated by unconfirmed reports that Saudi Arabia had sent tanks to Bahrain to quell unrest. Saudi Arabia's stock market fell more than 7% on the news. In addition, there was more fighting in Libya, and television reports said Iranian protesters clashed with security forces in Tehran.

Gold closed at a record $1,431.20 an ounce, and there was talk it could jump to $1,600 an ounce.

The losses in U.S. stocks wiped out all the market's gains achieved on Friday and Monday, when the Dow Jones industrials ($INDU) climbed a total of 158 points. The sell-off came despite a strong report on U.S. manufacturing and a report of strong  February auto sales. Federal Reserve Chairman Ben Bernanke told the Senate today that high oil prices -- if sustained -- could threaten what appears to the Fed to be a strengthening economy. Automakers offered similar warnings.
The Dow closed down 168 points, or 1.4%, to 12,058. The Standard & Poor's 500 Index ($INX) was off 21 points, or 1.6%, to 1,306. The Nasdaq Composite Index ($COMPX) was down 45 points, or 1.6%, to 2,737. Futures trading suggests a weak open on Wednesday.

This was the market's fourth loss in the last six sessions. Since hitting a peak of 12,391 on Feb. 18, the Dow has fallen 2.7%, with the S&P 500 down 2.7% and the Nasdaq off 3.4%. Transportation stocks were among the hardest-hit groups. The Dow Jones Transportation Average ($DJT) fell 128 points, or 2.5% to 4,957, with Delta Air Lines (DAL) dropping 5.6% to $10.61 and United Continental Holdings (UAL) falling 4.2% to $23.02.

Article continues below.

Commodity prices jump
Commodity prices were higher today as the dollar dropped to its lowest levels since November.

Light sweet crude oil settled up $2.66 to $99.63 a barrel in New York and then moved over $100 a barrel in after-hours trading. At 9:56 p.m. ET, crude was trading at $100.26 a barrel.

Brent crude, the benchmark North Sea crude, settled at $115.42 and was trading at $116, up 50 cents, at 9:56 p.m. ET. Retail gasoline nationally averaged $3.375 a gallon, AAA's Daily Fuel Gauge Report said, up from Monday's $3.368 national average and up from $3.07 on Dec. 31.

The U.S. Dollar Index, which measures the greenback against a basket of currencies, rallied to 77.083 in the late afternoon from 76.921 Monday as some investors sought safety from the global turmoil.

The 10-year Treasury yield was unchanged at 3.414%. 

Only two of the 30 Dow stocks ended higher on the day: Coca-Cola (KO), up 1.6% to $64.91, and Wal-Mart Stores (WMT), up 0.2% to $52.07.

Only six Nasdaq-100 ($NDX.X) stocks were  higher, led by biotech company Biogen Idec (BIIB), 2.6% to $70.18. The index fell 36 points, or 1.5%, to 2,315.

Energy prices -- New York close
Crude oil 

$99.63  $96.97  2.74%  9.03%
(per barrel)

 

 

 

 
Heating oil

$3.0235  $2.9389  2.69%  18.86%
(per gallon)

 

 

 

 
Natural gas 

$3.8730  $4.0370  -4.32%  -12.08%
(per mil. BTU)

 

 

 

 
Unleaded gasoline

$2.9834

$2.8927

-4.32%

-12.08%
(per gallon)

 

 

 

 
Brent crude

$115.42  $111.80  3.24%  21.82%
(per barrel)











Retail gasoline

$3.3750

$3.3680

0.21%

9.86%
(per gallon; AAA)












A big insider-trading case erupts
The Securities and Exchange Commission shocked Wall Street by announcing it has sued a former director of Goldman Sachs (GS) with providing improper tips to Raj Rajaratnam, the head of hedge fund company Galleon Group.

The SEC charged that Rajat Gupta, a former CEO of McKinsey & Co., the high-powered management consulting firm, provided early tips to Rajaratnam on earnings at Goldman and Procter & Gamble (PG) and on Berkshire Hathaway's (BRK.B) $5 billion investment in Goldman Sachs during the worst of the 2008 market crash.

Gupta and Rajaratnam have been friends, and Gupta has served as a director of some of Rajaratnam's funds.

The Wall Street Journal was unable to contact Gupta's lawyer. He has said Gupta has "neither violated any law nor done anything else improper."


Goldman Sachs shares were down 1.5% to $161.31. 


Manufacturing grows more than expected
Manufacturing in the U.S. grew in February at the fastest pace since May 2004 as factories added workers and boosted production, indicating more expansion momentum.

The Institute for Supply Management's factory index increased to 61.4 from January's 60.8, the ISM said. Readings greater than 50 signal growth. In Europe, manufacturing expanded at the fastest pace in more than 10 years, while the rate of growth at factories in China was the slowest in six months.

Business investment in new equipment is prompting U.S. companies like Eaton (ETN) and Deere (DE) to raise profit forecasts as the global economy picks up. The figures underscore Bernanke's testimony to Congress today that the economic recovery this year will be "more rapid" than in 2010.

"The fundamentals in the underlying economy still suggest further strengthening of economic activity as we go throughout the year," Russell Price, a senior economist at Ameriprise Financial, told Bloomberg News.

The median estimate called for an increase to 61, according to the Bloomberg survey of 77 economists. Forecasts ranged from 58.7 to 63.3.

GM has a 49% sales increase

February was a big month for auto sales. The automakers saw deliveries rise 27%, market research firm Auto Data said. The the closely watched sales rate hit an annualized 13.4 million units, the highest rate since a 14.2 million-unit rate in August 2009 during the Cash for Clunkers program.


General Motors (GM) reported a 49% increase in February sales, much larger than expected. Ford Motor (F) reported a 10% increase. Chrysler sales were up 13%.


Toyota (TM), Honda (HMC), Nissan (NSANY) and Hyundai (HYMLF) also reported sizable gains.


The automakers, however, are seeing some signs that more shoppers are focusing on fuel efficiency again, as gas prices get closer to $4 a gallon.


"With oil nearing $100 per barrel and gasoline prices continuing to rise, consumers’ consideration for fuel economy once again is taking top billing," Ken Czubay, Ford’s vice president for United States marketing, sales and service, said in a statement.

But the concern is not yet hurting sales of pickups, SUVs and larger vehicles.

Stocks making big moves
Boston Scientific (BSX), up 5% to $7.52, tops among Standard & Poor’s 500 stocks. The second-biggest maker of heart devices was raised to “outperform” from “sector perform” by RBC Capital Markets.

Fifth Third Bancorp (FITB), down 4.5% to $13.95. Ohio’s largest lender said it received a Securities and Exchange Commission subpoena requesting information about accounting on some of its commercial loans.

Lorillard (LO), up 1.6% to $77.98, the ninth-largest gain among S&P 500 stocks. We're not making this up. There was a question on whether menthol cigarettes are worse on the lungs than unflavored cigarettes. Shares moved up because a new government report said menthol smokes have not been proven to put smokers more at risk. Lorillard's Newport is the top-selling menthol brand with $5 billion a year in revenue.

Range Resources (RRC), down 7.3% to $50.34, worst among S&P 500 stocks. The natural-gas producer that is one of the biggest landholders in the Marcellus Shale field in Pennsylvania said it will sell 52,000 acres in the Barnett Shale field in Texas for $900 million. FBR Capital Markets cut the stock to "market perform" from "outperform" on valuation.

Sonus Networks (SONS), up 33.3% to $4.04, tops among Russell 2000 (RUT.X) stocks. The maker of voice infrastructure products forecast full-year revenue of $265 million at least, topping the Street estimate of $251 million.

Short hits from the markets -- New York close
 
 Tues.  Mon.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.130%

0.140%

-7.14%

8.33%
5-year Treasury note 

2.118%

2.137%

-0.89%

5.06%
10-year Treasury note

3.414%

3.414%

0.00%

3.30%
30-year Treasury bond

4.490%

4.490%

0.00%

2.93%
Currencies











U.S. Dollar Index

77.083

76.921

0.21%

-2.78%
British pound

$1.6273

$1.6273

-0.05%

4.28%
(in U.S. $)











U.S. $ in pounds

£0.615

£0.615

0.05%

-4.10%
Euro in dollars

$1.382

$1.381

-0.04%

3.30%
(in U.S. $)











U.S. $ in euros

€ 0.724

€ 0.724

0.04%

-3.20%
U.S. $ in yen 

82.237

81.740

0.16%

1.07%
U.S. $ in Chinese

6.593

6.568

0.01%

-0.34%
yuan











Canada dollar

$1.027

$1.030

-0.31%

2.32%
(in U.S. $)











U.S. dollar 

$0.975

$0.971

0.31%

-2.26%
(in Canadian $)











Commodities

 

 

 

 
Gold

$1,431.20

$1,409.90

1.20%

0.69%
(per troy ounce)

 

 





Copper

$4.510

$4.497

0.88%

1.41%
(per pound)











Silver

$34.427

$33.820

1.45%

11.28%
(per troy ounce)











Wheat 

$7.7575

$7.8250

-5.34%

-2.33%
(per bushel)











Corn

$7.2725

$7.2250

-0.51%

16.83%
(per bushel)











Cotton 

$1.9587  $1.9123  -4.52%  35.26%
(per pound)











Crude oil 

$99.63

$97.88

2.74%

9.03%
(per barrel)












50Comments
Mar 1, 2011 2:32PM
avatar
It is unbelievable how often the financial markets are manipulated by the Haves to take more out from the Have Nots.  The sky may not be falling but it definitely still showing rough weather ahead.  The news medias have to stop promoting the silver lining and start promoting the truth. 
Mar 1, 2011 3:06PM
avatar

Of coursethe numbers are better.  Easy money for cars.  Buy a car, no money down, take forever to pay.   Bu a houseful of furniture and pay when you get around to it.  And the Fed is absolutely pouring money into the world economy.  The impact of it is being felt globally with rising prices everywhere.  In my opinion, we're doing everything possible to go right back to where we were in 2004,5,6.   Something like 70% of all stocks are held less than 30 seconds.  This cannot have a good outcome. 

 

And it really helps when countless half assed articles are written playing "happy times are here again".  The old ship is leaking like a sieve.   Just remember, we're all expendable.  No one is looking out for you.  It's truly cover your own a.... time. 

Mar 1, 2011 3:54PM
avatar
This is another great example of oil speculators at work. They are taking advantage of this situation to push prices sky high for their own gains. What is it going to take before the government addresses this? How much more will the working and poor people in this country have to endure. It is a shame that a handful of traders can make life so difficult for so many people and get away with it.  Their Greed will ruin this country for all of us including future generations.
Mar 1, 2011 2:37PM
avatar

Oil will seriously damage this fragile economy, then depending upon what inflation does, could see the death of any recovery no matter how slight.  Looks like Obama will be a one turn President if this continues. The country is in a mood to "punish"  union workers, while CEO's get free rein to take what they want.

Mar 1, 2011 4:32PM
avatar

Just returned from a trip to Costco.....Big Ben calls for "mild inflation", does the guy ever go outside and shop?

 

Anyone who lived through the oil embargo in the 70's remembers how we were going to become energy independent, right!! Meantime the $$$$$$'s flow out of this country to continue buying from our great "friends" when we could be producing our own energy, creating jobs and massive revenues that would stay home.

 

Oh yeah, on the 17th I have a CD coming due. Big Ben thinks a 1% return is just dandy. Think this time I'm going take the money and buy guns & butter and salt them away.

Mar 1, 2011 3:07PM
avatar

make sure your garden equipment gas cans are full....  time to buy an old junk car just to store gas in it? 

 

Oil prices climbed Tuesday as Iran clamped down on anti-government protesters and unrest in the Middle East threatened to keep energy prices high for months to come.
Mar 1, 2011 4:38PM
avatar

Mirage Guy...

 

I agree with your political view of Obama and leftist oil industry sentiment... thats exactly why we are not opening Gulf drilling.  Thats exactly why our governemnt forces drilling to take place in deepwater territory when it could be done in shallow watters and controlled in case of a catastrophy.  Thats exactly why we will not make it affordable to build new, more productive refineries in this country so we have to rely on imported gasoline and diesel fuel from europe.  Thats exactly why the TAXATION KING called the EPA exists.

 

But...

Oil is up on real dollars, but they are not dollars that are related to hedging real physical bbls to protect margin.  The dollars ARE from speculative investors... investment banks (Goldman...).  The market is very removed from fundamentals.  Gasoline inventory in this nation is at 20 year highs.  We are swimming in Crude Oil.  In fact most folks dont realize that the US gets about 10% of its Crude Oil fromt the Saudi's... the rest comes from Canada, Venezuala and local primarily.  But because we cannot refine enough for our own demand we are subject to the Arab unrest since we import Eurpoean gas/distillates from there and thats their primary source of Oil.  Saudi's are sitting on over 2 million bbls/day of reduced production from the 2008 fiasco that smacked global (and primarily US) demand.  That demand has still not come back primarily due to unemployment, and wont for quite some time.  But that wont stop the investors.  Case in point... Brent crude over $115/bbl and wti knocking on the door of $100/bbl again.

 

The banks we all bailed out are driving the price spikes once again.  Take it from someone who is intimately involved.  Our hard earned tax dollars at work my friends.

Mar 1, 2011 7:04PM
avatar
Funny we dont buy gas from any of those countries, and the price goes up, yesterday say gas was 2.45 a gallon, how can they up the same gas that was 2.45 to 3.00? what a racket, its nothing but a scam just like wall street and the federal reserve, if we got rid of the federal reserve, and coined money according to the constitution there wouldnt be any economic problems, nothing but thieves. republicons and demoncrats are both the same snake with the illusion of 2 parties run by the bankers and corporations, we the people are not a voice anymore, i say we storm the capitol, the federal reserve, put everyone of those treasonous bas tards on tial and have public, televised beheadings to send the no more message and the scotus which is stacked those people ought to be elected by the people not the president nuff said?
Mar 1, 2011 5:38PM
avatar

Why is it they used the excuse oil prices were down and they had to raise our gas prices?  And now we have all these other resources from all over the world (who cares about LIbya, Egypt and so on?  That is there civil war, let the people stand up for their rights and stay out of it for ONCE AMERICA).  There are more people than government, even in the United States.  But why is it that we are paying for it, gas prices goes up and the oil tycoons already have millions and millions of dollars (greed) that is what it is.  When do they quit bleeding the people to death?  We have to go to work, and for all of us that live in areas where the job is not down the street or a block away or even a mile away have to pay for the gas.  It  is costing the man who makes minimum wage more on gas to go to work than he/she makes.  What about rent, food, electric, phone, and etc.  what about all those other factors?  And when gas prices goes up our food prices go up; what will we eat, I have notice people around my area are going back to raising there own beef & pork, and their own gardens.  We have that luxury to do that, but what about those who don't?  What about all the children and elderly in this world who can't?

 

Where have the morals and conscious gone?  When do we stop this?  When I say?  Enough is enough.  They can give all the excuses they want, and keep taking from us; but what about all those houses, businesses they own, yachts, you name it.  You can only live in one house, and drive one car (they have as many of 100's of cars) cars that cost so much it would feed thousands of people and help house them.  Our jobs have been taken out of the country due to GREED and the unions still taking all the money from it.  Why are we listening to these liberals and letting them blow smoke on us?  People, people. I can't afford my rent due to high gas prices, and barely pay the electric bill.  How about you?  Honestly I can say God has Blessed me; but I help those out with what little I do have myself.

 

 

Mar 1, 2011 5:39PM
avatar
hahaha.Well its about daqmn time. The ones running it don't drive. They take the subway or bus. Gas is up $0.30 a gallon in my town in just a week. And they'll push it higher too cause they already said it can go another 50cents before the consumer screams for heads.They tested the waters 2 years ago to see how high they could push it before consumption dropped off.

I'm damn tickled to see the suits on the floor hurting like everyone else.

Mar 1, 2011 4:24PM
avatar
If enough of us March on Wahington and demand Mr Obama resign, maybe he will...
Mar 1, 2011 4:15PM
avatar

Oil prices are set on an international level.  If the US didn't buy any oil the price would drop.  The problem is we are not the only customer.   Oil prices are up all over the work.  People pay for oil in cash, so real money is used to buy it, not speculators credit.  

 

If you want you can buy oil, anyone can.  Deal with it.  Mr. Obama wants expensive oil.  Expensive oil gives people incentives to use less, find a replacement, or find more.

 

US has adopted policies to make oil more expensive.  We restrict drilling here.  Say no more...

Mar 1, 2011 4:38PM
avatar
to you its 20 bucks more a tank to the nation its 145 million a day less in the economy you know its called cutting back on other stuff you cant just manufacture 20 more bucks per tank its called depression if it goes on for a couple more months. stocks what a joke the market will look like a blood bath when the oil speculators get done with them. and america will have its long awated depression. i say bring it on go for it run that gas right on up there **** everyone who gives a ****
Mar 1, 2011 3:52PM
avatar

No problems with the economy--remember--"Corporations are flushed with cash" as they all stated. Corporations have more cash on hand now that at any point in history--How--cutting the middle class--the money come from somewhere it for sure did not come from the 2% welfare queens at the top..Corporations are doing fine that is all that matters...

 So republicans will continue to give subsidies to Big Oil billions yearly--Billions to banks-- and billions to farm--billions to all the corporations but cut programs for single mothers cut middle class jobs--so no crying when this is what you voted for in 2010. No middle class and austerity for years--get used to it-- next is the rise in interest rates, bringing down the price of homes further..purchasing power is going down hill quickly people.....................

Mar 1, 2011 6:50PM
avatar
well fellow citizens take heart at the evidence that at least one element of our government is working....let's see now egypt,libya,bahrain,iraq all in turmoil....could the cia be having a GOOD month...any guesses how long it will take them to destabilize iran...bringing more freedom to everyone...well to the cia and their one ally in the middle east at least...prepare for higher gas,lower wages and more freedom?????wake up america
Mar 1, 2011 6:22PM
avatar
The chairman of the Fed flaps his lips, and the lemmings rush for the cliffs...I don't see anything new here....
Mar 1, 2011 8:04PM
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mexico just a hope skip and a jump yet they want to cause problems........the illegal's and the liberal socialists are trying to break up the country faster thru their hatred of the constitution and law's for which they never intend to abide by!

 

ARIZONA: THE STATE THAT HAS KAHOONAS!!

Mar 1, 2011 7:40PM
avatar
its only the bigining folks the greed ballers have stated their goal of 140 to 220 oil and 5 dollar gas. kiss the stock market goodby and the economy with it
Mar 1, 2011 8:57PM
avatar
Since our worthless gov wont do anything about this leagalized thievery it is time for the people to take action and try to end this sham!!   Death to all commodity speculators!!  They are blatenly stealing from us and even worse they are murdering (yes murdering) poor people in 3rd world coubtries by jacking up food prices so high that they starve to death!!  Look at the pictures of them laying on the ground nothing but a bag of bones wrapped in skin!!  Kids are laying there not even growing because of this!!  These low life scum bag speculators don't deserve to live!!  Murder is punishable by death in this country.  It's time to put some real fear into these  thieving liars!! 
Mar 1, 2011 5:44PM
avatar

I sit and wonder what will next Tuesday bring in the way of Oil/Gold prices, up and up? Or down or level. Seven days will tell . I don't think the US sets the economic tone of the world now. We are still a good place to sell to, and i believe we still sell to the world. But I wonder about the leadership role?

 

 

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