NEW YORK — Stocks suffered steep losses as oil prices surged Tuesday, renewing worries that higher fuel prices could hobble the economic recovery.
Oil rose $2.66, to settle at $99.63 a barrel, amid unrest in Iran and Libya. Iran clamped down on anti-government demonstrators, and forces loyal to Libyan leader Moammar Khadafy launched counterattacks against rebels expanding control over the country.
Prices jumped 13 percent last week with a rise in turmoil across North Africa and the Middle East. That pushed gas prices up 20 cents a gallon. As a result, Americans are now paying roughly $75 million more per day to fill their gas tanks than a week ago.
The Dow Jones industrial average lost 168.32 points, or 1.4 percent, to 12,058.02.
The Standard & Poor’s 500 index fell 20.89, or 1.6 percent, to 1,306.33. The Nasdaq composite fell 44.86, or 1.6 percent, to 2,737.41.
Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that a sustained increase in crude prices could pose a risk to the recovery. But he predicted only a temporary increase in inflation, not runaway prices. The Fed chief also said he expected the economy to grow this year, although not enough to lower the 9 percent unemployment rate.
“Anyone who thinks that a year from now we’re going to look at the Middle East and see nothing but candy and roses, that’s not going to happen,” said Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group. “Manufacturing, the overall U.S. economy, is doing very well. Still, that geopolitical situation will be an overhang.”
Bernanke’s comments suggest the Fed will stay on course to complete $600 billion of Treasury purchases through June in an effort to suppress borrowing costs and safeguard the economic recovery.
The surge in oil overshadowed data showing that factories added workers and boosted production in February, indicating more momentum for the expansion. The Institute for Supply Management’s factory index increased to 61.4, the highest since May 2004.
The Commerce Department reported that builders began work on fewer homes, offices and commercial projects in January. The annual rate was near its decade low, set in August.
