Stocks Slip As Oil Prices Push To Fresh Records

By: AP
By: AP

NEW YORK - Stocks slipped Friday as investors' nervousness over a fresh record for oil prices dented enthusiasm over a surprising jump in new home construction.

Wall Street, hoping for an economic rebound in the second half of 2008, has been searching for signs that the housing market, while weak, is perhaps bottoming out. The market got some reassurance when the government said construction of new homes rose 8.2 percent in April. The jump — the largest monthly advance in more than two years — was largely due to an increase in apartment construction, and compared to forecasts of a 0.7 percent decline.

Investors seemed unfazed by the Reuters/University of Michigan consumer sentiment reading, which fell in May to its lowest level in 28 years. The reading came in at 59.5, down from 62.6 a month earlier.

Energy worries continued to plague investors.

Light, sweet crude oil surged above $127 a barrel for the first time Friday, touching off further concerns about rising prices and their effect on consumers. Light, sweet crude recently changed hands at $126.88, an increase of $2.76 a barrel on the New York Mercantile Exchange.

Investors have been tracking energy prices closely, with the average U.S. retail price of gasoline around $3.77 per gallon and the average price of diesel fuel near $4.46 a gallon. Consumers and businesses alike are struggling with high commodities costs, despite mild overall readings on inflation, so Wall Street remains concerned about spending on discretionary items.

In the first hour of trading, the Dow Jones industrial average fell 30.37, or 0.23 percent, to 12,962.29.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 2.95, or 0.21 percent, to 1,420.62, and the Nasdaq composite index dropped 12.58, or 0.50 percent, to 2,521.15.

The stock market rose Thursday for the second day in a row, driving the S&P 500 and Nasdaq to five-month highs, as oil prices reversed gains to trade lower and as data on jobless claims and Philadelphia-area manufacturing came in better than expected.

Government bond prices were little-changed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was flat at 3.82 percent.

Gold prices rose, while the dollar fell against other major currencies.

Overseas, Japan's Nikkei stock average rose 0.39 percent. In afternoon trading, Britain's FTSE 100 rose 1.27 percent, Germany's DAX index rose 1.61 percent, and France's CAC-40 rose 0.67 percent.


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