Business

Business

Stocks drop as oil prices surge

May 24, 2008

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— U.S. stocks ended Friday with losses and fell sharply this week, as crude oil surged well above $130 a barrel, putting pressure on a market besieged by worries that inflation will crimp consumption and further weaken the economy.

The market's losses accelerated after a report showing inventories of unsold U.S. homes surged to a 23-year high in April. Market activity remained subdued, however, with many traders absent ahead of the three-day Memorial Day weekend.

"The bear-market rally (of the past two months) has petered out," said Peter Boockvar, equity strategist at Miller Tabak. "The economy is not going to do any better anytime soon, as we heard from many companies this week, and on top of that we have surging energy prices."

The Dow Jones Industrial Average fell 145 points, or 1.2 percent, to 12,479 on Friday, and finished the week 3.9 percent lower.

The S&P 500 index fell 18 points, or 1.3 percent, to 1,375 Friday, ending the week with a 3.5 percent deficit.

The Nasdaq Composite fell 19 points, or 1 percent, to 2,444 on Friday, losing 3.3 percent for the week.

The National Association of Realtors reported that the inventory of unsold homes jumped 10.5 percent to 4.55 million in April, an "uncomfortably high" level, said Lawrence Yun, chief economist for the real estate trade group.

Other declining sectors included energy, utilities, materials and financials.

Shares of Yahoo Inc. rose 0.7 percent after the company pushed back its annual shareholder meeting from July 3 to "the end of July" as it faces a proxy campaign led by billionaire Carl Icahn.

Trading volumes were especially light ahead of the holiday, with 1.1 billion shares exchanging hands on the New York Stock Exchange and 737 million trading on the Nasdaq stock market. Declining issues topped gainers by nearly three to one on both exchanges.

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