Surging Crude Oil Prices Push Stocks Lower

NEW YORK – Surging crude oil prices pushed stocks lower Wednesday as investors grew increasingly concerned about the threat higher energy costs pose to inflation.

The market was watching oil trading, with a barrel of light sweet crude quoted at $44.22, up 7 cents, on the New York Mercantile Exchange. While the Federal Reserve has said inflation is not a major issue presently, the hike in energy prices could soon trickle down to food prices and transportation costs for a variety of goods.

The markets received some positive news from two key economic reports. Factory orders rose 0.7 percent in June, more than than Wall Street expected. And the Institute of Supply Management’s service sector index for June rose more than economists had forecast.

In the first hour of trading, the Dow Jones industrial average fell 32.97, or 0.3 percent, to 10,087.27.

Broader stock indicators were modestly lower. The Standard & Poor’s 500 index was down 4.40, or 0.4 percent, at 1,095.29, and the Nasdaq composite index dropped 6.55, or 0.4 percent, to 1,852.87.

Technology shared suffered as telecom company Ciena Corp. warned that sales would slump significantly in the third quarter. Ciena fell 65 cents, or 24 percent, to $2.11.

Prudential Financial Corp., whose headquarters was named in this week’s terror alert as a possible target, fell 16 cents to $45.60 even as it reported a four-fold increase in quarterly earnings. The financial company posted earnings that were 19 cents a share more than expected.

CVS Corp. beat Wall Street estimates by 2 cents per share in its latest earnings statement, reporting a 17 percent rise in profits. The pharmacy chain was down 70 cents at $41.07.

Insurer Cigna Corp. fell 58 cents to $62.00 despite beating estimates by an impressive 50 cents per share. The company swung to a profit from a year-ago loss and boosted its earings outlook as well.

Clothiers Polo Ralph Lauren and Tommy Hilfiger both managed to surpass expectations, with Polo Ralph Lauren doubling its profits on the strength of its women’s line, and Hilfiger posting a less-than-expected loss due to slumping wholesale revenues. Polo Ralph Lauren rose 85 cents to $33.97, while Hilfiger was down 4 cents at $13.25.

Declining issues outnumbered advancers by nearly 9 to 2 on the New York Stock Exchange, where volume came to 144.54 million shares, compared with 137.45 million at the same point Tuesday.

The Russell 2000 index of smaller companies was down 3.77, or 0.7 percent, at 539.86.

Overseas, Japan’s Nikkei stock average fell 1.2 percent. In afternoon trading, Britain’s FTSE 100 was down 0.8 percent, Germany’s DAX index tumbled 1.6 percent, and France’s CAC-40 dropped 1.3 percent.

—

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com