NEW YORK – Wall Street had a renewed case of interest rate anxiety Thursday, with stocks falling on strong economic news and a jump in oil prices that heightened worries about inflation.
The Dow fell 47.14, or 0.42 percent, to 11,270.29. On Wednesday, the Dow added 81.96 to reach 11,317.43, its highest level since May 21, 2001.
A 5.2 percent upswing in monthly sales of existing homes eased worries about a slowdown in the housing market but fed fears that the Federal Reserve will continue boosting interest rates to stave off price inflation. The Fed's Open Market Committee meets next week.
Investors also fretted about a Labor Department report that 302,000 workers applied for jobless benefits last week, down 11,000 from the week before and marking the first decline in a month. The implied job growth added to Wall Street's inflation and interest rate concerns.
The unemployment numbers "increase the probability the Fed will make its way back to 5 percent," said Robert Tipp, chief investment strategist for Prudential Fixed Income. The nation's benchmark interest rate currently stands at 4.5 percent.
Broader stock indicators also fell. The Standard & Poor's 500 index lost 3.37, or 0.26 percent, to 1,301.67, and the Nasdaq composite index dropped 3.20, or 0.14 percent, to 2,300.15.
Bonds slipped, with the yield on the 10-year Treasury note rising to 4.74 percent from 4.70 percent late Wednesday. The U.S. dollar was higher against other major currencies in European trading, and gold prices were lower.
The National Association of Realtors said sales of existing homes totaled 6.9 million in February, even as mortgage rates recover from all-time lows. Economists were expecting 6.5 million homes sold.
Crude oil futures surged to near $64 per barrel on news that U.S. oil and gas reserves decreased last week. A barrel of light crude was quoted at $63.91, up $2.14, on the New York Mercantile Exchange — 19 percent higher than a year ago.
"You've got good home sales figures showing some decent economic growth, and you've got crude oil prices up. You put those together, and that creates worries that the Fed is going to keep going on rates," said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons.
In corporate news, General Motors Corp.'s sale of a 78 percent stake in its commercial mortgage division for $1.5 billion in cash did little to prop up the market. The day before, GM said it plans to offer buyouts to more than 125,000 hourly workers at Delphi Corp., its former auto-parts unit. GM slipped a penny to $22.
The struggling technology sector suffered after Adobe Systems Inc. said its profit sank 31 percent last quarter and gave a second-quarter outlook at the low end of analysts' estimates. Adobe's stock dropped 29 cents to $36.33.
Cereal and snack-food maker General Mills Inc. posted a 7 percent rise in third-quarter profit, topping Wall Street estimates as sales improved across its business segments. General Mills added 25 cents to $50.23.
Dell Inc., the world's largest personal computer maker, fell 7 cents to $30.34 after it announced it would buy privately held Alienware Corp., whose high-end PCs are widely acclaimed by video gamers for their fast performance and sleek, UFO-themed looks.
Declining issues outnumbered advancers by about 8 to 7 on the New York Stock Exchange, where volume came to 1.46 billion shares, compared to 1.49 billion traded at the same point Wednesday.
The Russell 2000 index of smaller companies rose 2.75, or 0.37 percent, to 747.60.
Overseas, Japan's Nikkei stock average fell 0.04 percent. In Europe, Britain's FTSE 100 closed down 0.29 percent, France's CAC-40 was unchanged for the session, and Germany's DAX index rose 0.25 percent.