Oil Prices Snuff Out Wall Street Rally

Another spike in oil prices to a record high squelched a would-be-rally on Wall Street today as the markets closed out a week many investors were eager to see come to a end.

The Dow traded higher much of the day, but by the close managed to squeak out a gain of only 8.34 points for the session to close at 10,047.24. For the week, the Dow finished down 2.3 percent.

Record-High Oil Price

The Nasdaq finished in negative territory today, dropping 6.95 points to 1,879.48, a drop of 1.6 percent for the week. The S&P 500 finished up 1.75 points today, to 1,119.11, and also was off 1.6 percent for the week.

Though a range of factors — from uncertain economic data and Tuesday’s Federal Reserve Board rate hike to corporate earnings concerns — were cited for dragging markets lower, the correlation with oil prices could not be ignored.

Oil futures, which had eased dramatically earlier in the month, closed today at a record high level in New York trading, at $48.88 per barrel. Prices rose 7 percent on the week, with a deep cut in production tied to shutdowns of Gulf of Mexico facilities largely due to Hurricane Ivan.

A report said production from that region remains nearly 30 percent below normal, with some 10 million barrels of oil taken out of production in the past 10 days.

The latest economic indicator seemed to another downer as the Commerce Department today said orders for durable goods dropped by .5 percent in August. That followed a sharp increase of 1.8 percent in July.

Home Sales

However, the data may have been skewed, the agency said, because of a surge of aircraft orders in July. With airplanes and other transportation equipment factored out, orders rose 2.3 percent, indicating that manufacturing continues to see favorable conditions.

Separately, the National Association of Realtors said existing home sales plunged in August by 2.7 percent. The association blamed temporarily higher mortgage rates, which have since moderated.

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