NEW YORK – Stocks slid Monday as a surge in oil prices and a possible rate increase by the Federal Reserve (search) on Tuesday raised concerns consumer spending will slow, hindering profit growth in the third quarter.
The Dow Jones industrial average (search) declined 84.31 points, or 0.79 percent, to close at 10,557.63, after falling more than 1 percent late in the session. The Standard & Poor's 500 index (search) dropped 6.89 points, or 0.56 percent, to finish at 1,231.02. The technology-laced Nasdaq Composite Index (search) fell 15.09 points, or 0.70 percent, to close at 2,145.26.
The Dow Jones Transportation Average (search) dropped 1.2 percent, reflecting concerns about the impact of higher oil and gasoline prices on shipping costs and corporate profits. Shares of stocks in the DJ transport index fell sharply, with United Parcel Service down 2.5 percent at $67.26, and FedEx Corp. down 2.8 percent at $77.93.
Shares of Honeywell International Inc. (HON) fell 2.5 percent to $3l conglomerate agreed to sell Indalex Aluminum Solutions to an affiliate of private equity firm Sun Capital Partners Inc.
"There was no demand for stocks with all the uncertainty regarding oil prices and the Fed meeting tomorrow," said Matthew Kelon, a fund manager at the Kelmoore Strategy Funds in Palo Alto, California. "It was not a surprise to see stocks heading down."
Declines in shares of industrial conglomerates, among the most sensitive companies to high energy costs, helped drive down both the Dow and the S&P 500. General Electric Co. (GE) fell 1.2 percent, or 42 cents, to $34.05, while 3M dropped 1.2 percent, or 85 cents, to $72.50.
U.S. crude oil futures surged more than $4 a barrel as another tropical storm headed toward Florida, and possibly the Gulf of Mexico, where oil operations are still struggling to recover after Hurricane Katrina hit late last month. Crude for October delivery shot up $4.39 to settle at $67.39 a barrel on the New York Mercantile Exchange.
Economists polled by Reuters expect the Federal Open Market Committee (search) to raise its benchmark fed funds rate to 3.75 percent when it meets Tuesday.
The surge in oil prices helped push shares of Exxon Mobil Corp. (XOM) up 1.5 percent, or 93 cents, to $64.63. The company's market value crossed the $400 billion level Monday, making Exxon Mobil only the fourth U.S. company to have breached that mark, according to Standard & Poor's.
Shares of eBay Inc. (EBAY) fell 0.4 percent, or 16 cents, to $36.94 after Bear Stearns cut its rating on the Web auctioneer to "peer perform" from "outperform."
But Nike Inc. (NKE) climbed 6.4 percent, or $4.99, to $83.45 after the world's largest athletic shoe maker reported better-than-expected earnings.
On Nasdaq, declining stocks included Sirius Satellite Radio Inc. (SIRI). Shares in the No. 2 nascent pay-radio market fell 5 percent, or 35 cents, to $6.70. Sirius nudged up its 2005 revenue forecast Monday, but still fell short of Wall Street expectations.
On the NYSE, Boeing Co. (BA) shares fell 1.1 percent, or 70 cents, to $64.10 after a source said Friday that the aerospace company could lose a contract for developing secret imaging satellites, a project that has seen soaring costs and schedule problems.
Wendy's International Inc. (WEN) fell 2.2 percent, or $1.05, to $46.27 after it said Monday its president and chief operating officer has resigned.
Shares of Blockbuster Inc. (BBI) fell 2.9 percent, or 14 cents, to $4.62 after the company's chief executive officer told The Wall Street Journal that the entire video rental industry "is in the tank."
Trading was heavy on the New York Stock Exchange, with about 1.56 billion shares changing hands, above last year's daily average of 1.46 billion, while on Nasdaq, about 1.6 billion shares were traded, below last year's daily average of 1.81 billion.
On both the NYSE and the Nasdaq, declining stocks outnumbered advancing ones by a ratio of about 2 to 1.