NEW YORK, Aug. 5 -- After a one-day reprieve, oil prices shot higher again Thursday, setting another record. The jump spooked stock market investors and drove the Dow Jones industrial average below 10,000 on fears that higher energy costs could further dampen consumer spending and undermine an already fragile economic recovery.
Crude oil contracts for September delivery closed at a record $44.41 per barrel in New York trading on renewed concern about a loss of supply from Russia.
Traders work in the oil trading pit of the New York Mercantile Exchange.
(David Karp -- Bloomberg News)
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Market analysts and traders said the spike in oil prices directly led to a stock market sell-off in which the Dow fell 163.48 points, or 1.6 percent, to close at 9963.03, with 29 of 30 stocks in the average closing lower. It was the worst one-day point and percentage decline for the Dow since March 11, when it dropped 168.51, or 1.64 percent.
Other major market indicators sank as well. The technology-heavy Nasdaq composite index slipped 33.43 points, or 1.8 percent, to close at 1821.63. The broad Standard & Poor's 500-stock index closed at 1080.70, down 17.93, or 1.6 percent. It was the lowest close for the S&P 500 this year as 468 of 500 stocks in the index declined.
All three major stock market indicators have lost ground this year. The Nasdaq has fared worst, down 9 percent. The Dow is off 4.7 percent, while the S&P 500 is down 2.8 percent.
Despite the recent spike, energy analysts and economists said that when adjusted for inflation, oil prices are still far from where they were during the energy crisis of the late 1970s and early 1980s and that the United States has a solid supply of gasoline.
But experts also said oil prices are high enough to dent consumer spending, threatening a key pillar of the economic recovery at a time when the health of business spending and hiring remains uncertain.
If businesses fail to pick up spending where consumers leave off, or fail to sufficiently increase worker paychecks, the recovery could falter. That fear is reflected in the stock market.
"Oil prices are clearly part of the market's weakness," said Henry Cavanna of Cavanna Capital Management. "The question is whether they will undermine economic expansion."
A large part of the answer could come Friday, when the Labor Department issues its July jobs report. The economy has added jobs every month since last August, but the size of the monthly increase peaked in March and dipped in each of the three months since.
