NEW YORK – Stocks fell Thursday, ending four days of gains, as oil prices surged past $48 a barrel, heightening worries about high energy costs and their impact on corporate profits.
The blue-chip Dow Jones industrial average (search) lost 42.33 points, or 0.42 percent, at 10,040.82. The Standard & Poor's 500 Index (search) was down 3.94 points, or 0.36 percent, at 1,091.23. The technology-laced Nasdaq Composite Index (search) fell 11.48 points, or 0.63 percent, to 1,819.89.
Google (GOOG), which had lowered its pricing range for the IPO, leaped more than 18 percent after trading began in late morning. Shares of smaller search engine Mamma.com (MAMA) also jumped but Google's chief rival, Yahoo Inc. (YHOO), slipped.
Oil continued to be the focus for investors after NYMEX crude oil futures rose to carve a fresh record of $48.75 before settling at $48.70 as traders remained concerned that renewed violence in Iraq could disrupt supplies.
"Basically, forty-eight bucks on oil is going to keep the pressure on the market," said David Hegarty, head of equity trading for Commerzbank Securities.
"Crude continues to be the name of the game and will provide a cap on any attempted rallies here for equities," Hegarty said.
Concerns that surging oil prices will hurt corporate earnings in terms of both higher costs and softer demand for their products have dogged stocks for weeks. Crude futures have set records in 14 out of the past 15 trading sessions.
The price hike contributed to ending the market's four-day rally and pushed the Dow average briefly back below the 10,000 mark during afternoon trading.
"Going into today, the S&P was up 30 points in three days so we were due for a little breather and oil was the catalyst," said Peter Boockvar, equity strategist at Miller Tabak & Co.
In economic news, the number of Americans filing new claims for unemployment benefits fell for a third consecutive week, suggesting improvements in the labor market after a rough patch earlier this summer. But analysts pointed out that the figures do not include the impact of Hurricane Charley (search), which will be reflected in next week's data.
Investors were disappointed when the Philadelphia Federal Reserve (search) said its regional manufacturing index slipped to 28.5 in August from 36.1 in July, well beyond forecasts of a decline to 32.0.
"The Philly Fed came in lower than expected so there was some slight disappointment there," said Hegarty.
Separately, a measure of future economic activity fell in July for the second consecutive month, reinforcing other data that indicates the recovery is slowing. The decline in the Conference Board's (search) Index of Leading Economic Indicators ) reflects growing concerns about rising costs for energy and food, as well as worries about future economic growth.
In addition to energy prices, which have raised worries about inflation and the prospect of corporate earnings growth in the second half, weaker forecasts from software companies have weighed heavily on the market. With many shares oversold after weeks of sluggish trading, the bounce seen during the previous four sessions could simply have been a counter rally, analysts said.
"Some of the market's bellwethers are technology issues, and they're very sensitive to the economy," said Steven Goldman, chief market strategist with Weeden & Co. in Greenwich, Conn. "If there is a shadow of doubt, investors become risk-averse. And tech stocks have a very difficult time in an uncertain environment."
Google, which set its final IPO price at $85 late Wednesday — far lower than previously forecast — began trading shortly before noon, and was up $16.04 at $101.04. Stock performance at other search engines, closely watched as Google comes to market, were mixed. Yahoo! was down 48 cents at $28.00 and Ask Jeeves Inc. (ASK) fell 19 cents to $25.89.
Mamma.com rose 14 percent, up 74 cents at $6.00. FindWhat.com (FWHT) nudged up 3 cents to $13.88, although Ask Jeeves Inc. fell 28 cents to $25.80.
Wal-Mart Stores Inc. (WMT) was down $1.24 at $38.12 after announcing plans to buy China's largest online retailer, Joyo.com Ltd., a deal valued at $75 million. Joyo.com, which sells books, movies, music and gifts, has an estimated 80 million customers.
Amazon.com Inc. (AMZN) rose 64 cents to $40.00 after announced plans to buy China's largest online retailer, Joyo.com Ltd., a deal valued at $75 million. Joyo.com, which sells books, movies, music and gifts, has an estimated 80 million customers.
Delta Air Lines (DAL) shed 6 cents to $4.01, after the struggling carrier said more job cuts are ahead as it tries to avoid bankruptcy court. High wages and rising fuel costs have hurt the nation's third-largest carrier, which has faced stiff competition from low-fare airlines.
Canadian telecom equipment giant Nortel Networks (NT) added 27 cents to $3.87 after it announced plans to slash its work force by 10 percent as it struggles to recover from an accounting scandal.
Trading was moderate, with nearly 1.3 billion shares changing hands on the New York Stock Exchange, below the 1.4 billion daily average for last year. About 1.4 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year.
Decliners outnumbered advancers on the NYSE and the Nasdaq by about three to two.
The Russell 2000 index, which tracks smaller company stocks, was down 4.17, or 0.8 percent, at 537.44.
Overseas, Japan's Nikkei stock average finished 1.2 percent higher Thursday. In Europe, France's CAC-40 added 0.1 percent, Britain's FTSE 100 rose 0.2 percent and Germany's DAX index lost 0.1 percent.
Reuters and the Associated Press contributed to this report.