A trader looks up on the main trading floor of the New York Stock Exchange in New York, last week. - REUTERS
NEW YORK (Reuters):
UNITED STATES stocks dropped for the third straight day on Friday as rapidly escalating violence in the Middle East drove oil prices to a record high, and investors fled stocks to move money into safer assets.
Manufacturer General Electric Co. was the biggest drag on the Standard & Poor's 500 index after its quarterly outlook disappointed Wall Street.
Shares of home builders fell a day after D.R. Horton Inc., the largest U.S. home builder, cut its yearly forecast for new orders.
MIDDLE EAST IS ON THE BOIL
"No one wants to be long on the market ahead of the weekend. A lot of cash is sitting on the sidelines because the Middle East is on the boil," said Joseph Quinlan, chief market strategist at Banc of America Capital Management.
The Dow Jones industrial average was down 106.94 points, or 0.99 per cent, to end at 10,739.35. The Standard & Poor's 500 Index was down 6.09 points, or 0.49 percent, to finish at 1,236.20. The Nasdaq Composite Index was down 16.76 points, or 0.82 per cent, to close at 2,037.35.
For the week, the Dow fell 3.2 per cent, the S&P 500 lost 2.3 per cent and the Nasdaq shed 4.4 per cent.
For the Dow and the Nasdaq, it was the worst three-day decline since April 2005 when worries about a soft patch in the U.S. economy and anti-Japan protests in China hit stocks.
The energy sector helped keep the S&P 500 afloat, with the S&P energy sector index climbing 1.2 per cent as crude oil hit a record close above $77 a barrel.
U.S. crude oil for August delivery gained 33 cents to settle at $77.03 a barrel, a record close on the New York Mercantile Exchange, after Israel struck Hizbollah targets in Lebanon and Hizbollah's chief vowed an open war against Israel. Earlier, oil hit $78.40, the highest price for front-month crude since NYMEX started trading oil futures in 1983.
Shares of Exxon Mobil, the world's largest publicly-traded oil company, rose 1.3 per cent, or 83 cents, to close at $64.90 on the New York Stock Exchange.
NEGATIVE TERRITORY
Friday's decline nearly eliminated the Dow's gain for the year. The S&P 500 and the Nasdaq Composite index were already in negative territory for 2006.
In the bond market, the benchmark 10-year U.S. Treasury note gained 1/32 in price and the yield was 5.07 per cent, down from 5.08 per cent late on Thursday, as investors fled to the safety of government bonds. The dollar
rallied against major currencies and gold closed at a seven-week high at $668 an ounce in New York as investors fled to safety there as well. Earlier, the COMEX August gold futures contract hit $669, a peak not seen since May 30.
Adding to negative sentiment, The New York Times said on Friday it was investigating an envelope received at the paper containing white powder, raising fears of a possible recurrence of anthrax-tainted letters sent to newsrooms in 2001.
Taken from The Sunday Gleaner, July 16, 2006
