Erupting Oil Prices Ignite Selloff

FOX Business: The Power to Prosper

March was off to a rocky start, with major stock market indexes diving more than 1% amid fears rising energy prices would stunt the global economic recovery.

Today's Markets

The Dow Jones Industrial Average dipped 168.32 points, or 1.38%, to 12,058, the S&P 500 slid 20.89 points, or 1.57%, to 1,306, and the Nasdaq Composite Index skid 44.86 points, or 1.61%, to 2,737. The FOX 50 was down 12.45 points, or 1.32%, to 927.

Crude prices leaped Tuesday amid fears political instability that has struck several North African and Middle Eastern countries would spread to other oil-rich countries, such as Saudi Arabia and Iran. Indeed, protestors clashed with police in Iran, according to numerous reports.

Oil settled higher by $2.66, or 2.74%, at $99.63 a barrel -- the highest close since September 2008.

On the consumer level, prices at the pump continued moving higher, averaging $3.38 for a gallon of regular, as compared with $3.18 a week ago, according to the AAA Fuel Gauge Report.

Major moves in energy prices drove equity markets in late February, with analysts concerned that high energy prices could put a damper on the global economic recovery. Despite these fears, the Dow had its best February performance since 1998, with the blue chips gaining for three straight months.

Markets were also swayed by Ben Bernanke, who told a Senate panel a prolonged rise in oil prices could pose a threat to economic growth. However, the chairman of the Federal Reserve believes the larger concern is a short-term, moderate increase in price levels.

Markets also got disappointing data from the Commerce Department that showed construction spending slipped 0.7% in January, falling below economists' estimates of a loss of 0.4%. Economists pinned some of the weakness in this report on tough weather throughout the country in January.

Despite moderate economic growth, continued weakness in the jobs market is still preventing a full recovery, Fed chief Ben Bernanke said. The Fed plans on continuing its highly expansionary monetary policy regime -- including keeping short-term interests rates close to 0% and buying huge swaths of long-term U.S. treasury bonds -- in a bid to hasten the pace of the U.S. economic recovery.

However, some economists and hawkish Fed officials, believe accelerating the economy in this way can lead to high levels of long-term inflation in coming years.  Prices, including volatile food and energy, jumped 1.6% on a year-over-year basis in January, according to data from the Commerce Department.

The highly-watched Institute for Supply Management Manufacturing Index unexpectedly jumped to 61.4 in February -- its highest level since May 2004.  Economists were expecting the index to inch lower to 60.5 in February from 60.8 in January.

"This is quite a strong report, which corroborates the improvement seen in regional manufacturing indices throughout the month," Barclays Capital economist Nicholas Tenev, wrote in a research note.

Readings over the 50 mark are widely considered an indication of expansion in the manufacturing sector, which is often viewed as a key component in broader job market growth.

Some market participants remained bullish on the U.S. markets.

“We’re in a shorter pullback phase in the market,” said Marc Pado, U.S. markets strategist at Cantor Fitzgerald.  Stocks "will move higher still throughout the rest of the year.”

Gold --which settled at a record high -- jumped $21.40, or 1.52%, to $1.430 a troy ounce, as assets shifted from volatile equity markets to gold that is widely considered a safe haven.

In currency markets, the euro lost 0.22% on the U.S. dollar and the dollar edged 0.16% higher on the Japanese yen.

Auto Sales 

General Motors' (NYSE:GM) retail sales soared over 70% on a year-over-year basis in February -- the highest jump on record.

Ford Motor Company (NYSE:F) said its retail sales climbed 23% on year-over-year basis, driven higher by strong sales of its Fiesta, Focus and Explorer models.

Chrysler Group reported its retail sales were up 36% from last year. The company's SUV lineup, including the Jeep and Dodge Durango, helped boost sales.

Corporate Movers

Autozone (NYSE:AZO) unveiled a fiscal second-quarter profit of $3.34 a share -- a quarter-over-quarter gain of 20% -- easily beating analysts' estimates of $3.06. The auto-parts seller benefited from higher margins and revenue from new stores.

Fifth Third Bancorp (NASDAQ:FITB) is being investigated by the U.S. Securities and Exchange Commission on how the bank reported the value of certain commercial loans, according to an annual filing. The Ohio-based bank noted in the report that the probe could lead to "material adverse consequences."

Citigroup (NYSE:C) plans on selling its Egg Credit unit to London-based Barclays Bank, a unit of Barclays PLC (NYSE:BCS), as the banking-giant seeks to reduce assets that aren't directly related to its core banking business.

HSBC Holdings (NYSE:HBC) saw its profits more than double in 2010, but the London-based bank slashed its return on equity target -- a key metric for profitably in banking.  As a result, numerous ratings agencies cut their price targets for the company, prompting shares to sink in trading in London.

JPMorgan Chase (NYSE:JPM) is working to wrangle a group of banks to put together a new loan package for the New York Mets, according to a report by the New York Post. The Mets have more than $1.6 billion in debt in the wake of the Madoff Ponzi scheme and $900 million new ballpark.

Foreign Markets

European markets slipped from session highs Tuesday. The English FTSE 100 was lower by 0.26% to 5,978, the French CAC 40 slipped 0.11% to 4,106 and the German DAX climbed 0.13% to 7,281.

In Asia, the Japanese Nikkei was soared 1.22% to 10,754 and the Chinese Hang Seng was up 0.25% to 23,396.