New York – Stocks plummeted Monday as heightened fears of another hurricane hitting the Gulf Coast sent oil prices racing past $67 a barrel and investors grew anxious about the Federal Reserve’s upcoming interest-rate meeting.
Wall Street saw some bright spots in merger activity and strong earnings from Nike Inc. and Carnival Corp., but the market became increasingly uneasy as surging energy prices threatened consumer spending. Investors also awaited the Fed’s decision today whether to raise rates or halt its string of increases to mitigate an economic slide following Hurricane Katrina.
With an intensifying Tropical Storm Rita nearing Florida’s tip and poised to hammer the Gulf Coast just weeks after Katrina’s devastation, the market retreated heavily late in the session amid light trading.
On the New York Mercantile Exchange, a barrel of light crude jumped $4.39 to $67.39, as gasoline futures climbed 24 cents to $2.04 a gallon.
At the close of trading, the Dow Jones industrial average dropped 84.31, or 0.79 percent, to 10,557.63. The Dow lost as much as 120.69 during the session.
Broader stock indicators also declined. The Standard & Poor’s 500 fell 6.89, or 0.56 percent, to 1,231.02, and the Nasdaq composite index sank 15.09, or 0.7 percent, to 2,145.26.
The Bloomberg Colorado Index, a price- weighted list of companies based in the state, rose 0.92 to 315.56.
Bonds rose, with the yield on the 10-year Treasury note sliding to 4.25 percent from 4.27 percent Friday. The U.S. dollar was mixed against other major currencies in European trading, while gold prices gained for a second day and set a fresh 17-year record.
Although Wall Street is uncertain about what the Fed’s decision is likely to be, many analysts are predicting the central bank will continue lifting rates to stem inflation and will keep that as its main priority despite the widespread economic ripple left in Katrina’s wake. The Fed’s policy announcement is expected this afternoon.
“I don’t see where they’re going to be able to back down with inflation increasing the way it is and oil rising,” said Bill Groenveld, head trader at vFinance Investments.
