NEW YORK — Falling oil prices are becoming another sign of investors’ deflating hopes for a speedy economic recovery.
Major stock indexes skidded 2 percent Tuesday as crude oil fell for the fifth straight day. The Dow Jones industrial average fell 161 points to its lowest close since late April.
Lower oil prices can help the economy by reducing costs, but investors are looking to the latest slide as an unwelcome prediction that demand for energy and basic materials will remain weak as the recession lingers.
Trading volume remained light amid a dearth of economic news this week and as investors await the beginning of the second-quarter earnings season, which starts today with Alcoa but won’t pick up speed until next week.
Stocks have drifted lower in recent days as the market’s confidence about the economy took hits from a poor jobs report for June, waning consumer confidence and plunging commodities prices.
That stoked fears that the market might have gotten ahead of itself in March and April, when investors sent stocks soaring in hopes that a nearly two-year-long recession will end sometime this year. The next guideposts for the market will be the forecasts companies give during earnings reports about how business conditions look for the rest of the year.
“Uncertainty has crept back into the picture,” said Carl Beck, partner at Harris Financial Group. “We started to get some data that put a damper on some of the optimism that had been growing about the economic recovery, and that sort of put everything on hold until we start hearing from companies.”
The Dow fell 161.27, 1.9 percent, to 8,163.60. It was the lowest finish for the blue chips since April 28. The broader Standard & Poor’s 500 index fell 17.69, 2 percent, to 881.03, its lowest finish since May 1. The Nasdaq composite index lost 41.23, 2.3 percent, to 1,746.17, the lowest close since May 27.
Oil tumbled from an eight- month high hit last week on concerns that a weak economy will dampen demand for energy, settling at $62.93 a barrel on the New York Mercantile Exchange. That helped send Exxon Mobil down $1.54, 2.3 percent, to $66.56. ConocoPhillips lost 84 cents, 2.1 percent, to $39.99.
