FOX Business: The Power to Prosper
Markets dipped after a tumultuous session as traders mulled the consequences high energy prices would have on economic growth.
The Dow Jones Industrial Average was lower by 79.9 points, or 0.66%, to 12,090, the S&P 500 Index dipped 11 points, or 0.83%, to 1,310, and the Nasdaq Composite slipped 39 points, or 1.4%, to 2,745. The FOX 50 lost 6.5 points to 927.
Stocks have been driven by volatile crude markets in recent sessions as traders worry high energy prices could derail the economic recovery. Despite a sell off on Friday, stocks managed to gain slightly last week, with the blue chips climbing 0.33%.
The Dow sustained triple-digit losses Monday, but clawed its way back as oil gave back some of its early gains.
The utility sector was the only major industry to advance Monday, with companies like Dynergy (NYSE:DYN) and Xcel Energy (NYSE:XEL) moving higher. Technology and materials issues like Dow Chemical (NYSE:DOW) and Intel (NASDAQ:INTC) fared the worst.
Oil prices have surged more than 23% since February 15 on concerns instability in the Middle East and North Africa would crimp the worldwide supply of oil. Fighting between forces loyal to Libyan leader Muammar al-Qaddafi and rebel forces continues escalating in oil-producing Libya.
Indeed, forces loyal to Qaddafi launched airstrikes against a rebel position at a key oil port Monday. There are also fears that turmoil could spread to larger oil producers, namely Saudi Arabia.
Crude closed the day higher by $1.02, or 0.98%, to $105.34 a barrel -- the highest settlement price since September 2008.
The Obama administration has repeatedly cited the U.S. strategic oil reserves in a bid to allay fears of a supply crunch.
“There is considerable spare oil production capacity globally, and we and other major economies possess substantial strategic reserves of oil,” Treasury Secretary Timothy Geithner said in a speech last week. “If necessary, those reserves could be mobilized to help mitigate the effect of a severe, sustained supply disruption.”
Recent reports by the Energy Department have also shown crude inventories at a key domestic shipping in Cushing, Oklahoma remain near all-time highs.
As oil prices climb, consumers continue seeing higher prices at the pump. The average price for regular gas is $3.51, up from $3.12 a month ago. If sustained, high prices can force consumers to shift their spending away from goods and services and into purchasing fuel. Consumer spending is an important factor in broad domestic growth, according to economists.
On the economic front, consumer credit jumped $5.01 billion in January, according to a report by the Federal Reserve -- far more than the $3.9 billion economists forecast. Consumer credit includes many types of lending, including credit cards and auto loans. The metric lags behind two months, so its market impact is generally muted, but it does provide an interesting snapshot of consumers' borrowing habits.
Consumers paid off so-called revolving credit, which includes credit cards, and significantly increased non-revolving borrowing, such as car and student loans, according to the report.
In currency markets, the dollar gained 0.7% against a basket of world currencies and the euro lost 0.11% against the greenback.
Gold climbed $5.90, or 0.41%, to $1,434 a troy ounce, after edging higher by 1.4% in the prior week.
Western Digital (NYSE:WDC) is acquiring Hitachi Global Storage Technologies, a unit of Hitachi (NYSE:HIT), for $4.3 billion in cash and stock.
Starbucks (NASDAQ:SBUX) was upgraded from "equal weight" to "overweight" with a price target of $40 -- a nearly $7 premium to its Friday close-- by analysts at Morgan Stanley.
Motors Liquidation Company, the entity that was formed when General Motors (NYSE:GM) filed for chapter 11 bankruptcy, agreed to a $50.6 million settlement with the U.S. government to address certain "environmental liabilities" at 34 GM sites.
Sony (NYSE:SNE) announced plans to purchase Hawk-Eye -- a company specializing in technology that tracks the path of balls in sporting events -- for an undisclosed amount.
AOL (NYSE:AOL) closed its $315 million deal to acquire media Web site, the Huffington Post. Huffington Post receives over 27 million visitors a month.
Ciena (NASDAQ:CIEN) unveiled a first quarter loss of 16 cents a share, excluding one time charges, and issued a tepid outlook for the current quarter. Shares of the networking-equipment maker plummeted more than 12% after analysts cut their outlook.
Unilever (NYSE:UL) is voluntarily recalling two of its Skippy Peanut Butter products in sixteen states because of possible salmonella contamination.
In Europe, the English FTSE 100 swung lower by 0.28% to 5,973, the French CAC 40 was down 0.74% to 3,990 and the German DAX slipped 0.24% to 7,161.
Asian markets were mostly lower: the Japanese Nikkei tumbled 1.8% to 10,505 and the Chinese Hang Seng sunk 0.41% to 23,313.