Investors extended their blue chip selloff Thursday as oil prices neared their all-time highs, renewing Wall Street's concerns that high energy costs would deflate third-quarter earnings. Only the Nasdaq composite index managed a minimal gain.
Analysts said oil prices, which continued their climb after shooting past $48 Wednesday, would keep consumer spending down and business costs rising, a combination that will squeeze profit margins and lower third-quarter earnings. A barrel of light crude settled at $48.46 Thursday, up 11 cents on the New York Mercantile Exchange, after reaching an intraday high of $49.
The Bush administration announced Thursday it would provide U.S. refineries with "limited quantities" of crude oil from the nation's emergency stockpile to help offset supply disruptions along the Gulf Coast from Hurricane Ivan. The move could help ease rising fuel prices, less than six weeks before the presidential election.
Oil prices were also blamed, in part, for a lower reading on the Conference Board's index of leading economic indicators, the third straight monthly decline. Investors believed the forward-looking index sent a signal that economic growth has been slowing and would likely taper off through the end of the year.
The Conference Board said its Composite Index of Leading Economic Indicators fell 0.3 percent in August to 115.7, following a drop of 0.3 percent in July and larger than the 0.2 percent drop forecast by economists. The index, which measures the potential for future economic growth, left Wall Street with reduced hopes for a strong finish to the year, although the Conference Board said the three months of declines were not enough to signal an end to growth entirely.
Investors' concerns about job growth _ and the resulting consumer spending _ increased as the Labor Department reported a 14,000 increase in first-time jobless claims for the week. While the hurricanes in Florida were blamed for the jump, investors have been hoping for a return to this spring's strong job growth as a sign of strength in the economy.