New York – A hike in oil prices sent stocks sharply lower Wednesday as traders worried about the damage that Hurricane Rita might wreak on Texas refineries. The Dow Jones industrial average lost more than 100 points.
Stocks slid after oil futures rose as much as $2 a barrel in morning trading. While economists have debated the long-term economic impact of Hurricane Katrina, few have ventured to guess what a hit from another powerful hurricane might mean to long-term oil prices and the economy.
A barrel of light crude was quoted at $66.80, up 60 cents, in trading on the New York Mercantile Exchange.
“Hurricane Rita, and its corollary effect on energy prices, is moving the market today, no question about it,” said William Hummer, chief economist at Wayne Hummer Investments. “Uncertainty is poison for the market.”
Trading was heavy. The Dow fell 103.49, or 0.99 percent, to 10,378.03. Over the last three sessions, the Dow has fallen 263.91, or 2.48 percent.
Broader stock indicators also fell sharply. The Standard & Poor’s 500 index fell 11.14, or 0.91 percent, to 1,210.20, and the Nasdaq composite index fell 24.69, or 1.16 percent, to 2,106.64.
The Bloomberg Colorado Index, a price- weighted list of companies with operations in the state, fell 2.26 to 311.64.
Bonds rose, with the yield on the 10-year Treasury note falling to 4.17 percent from 4.25 percent late Tuesday.
The U.S. dollar fell against other major currencies in European trading. Gold prices were higher.
With no significant new economic data released Wednesday, traders focused on Tuesday’s Federal Reserve interest-rate hike, which was widely seen as a sign that the Fed is worried about inflation. In its policy statement, the Fed described inflation expectations as “contained” but not “well-contained.”
“It makes me think that the economic risk is more stagflationary than it has been,” said Brian Gendreau, investment strategist at ING Investment Management.
