Rising Commodities Worry Investors

NEW YORK, April 6 -- Inflation concerns dominated Wall Street on Thursday, with stocks mostly lower as crude prices marched toward $68 per barrel, gold prices climbed and jobless claims fell. Interest in small-cap and technology stocks pushed the Nasdaq composite index narrowly higher, however, sending the index to its third straight five-year high.

The Dow Jones industrial average fell 23.05, or 0.2 percent, to 11,216.50.

The Standard & Poor's 500-stock index lost 2.52, or 0.2 percent, to 1309.04, and the Nasdaq composite index rose 1.42, or 0.1 percent, to 2361.17. It was the Nasdaq's best close since Feb. 16, 2001.

Strength in the labor market also unnerved investors, as the Labor Department reported a third straight drop in weekly unemployment claims.

Investors were also worried by the increase in gold and oil prices, as commodities are generally seen as a hedge against higher interest rates. With the economy growing solidly, investors worry that more rate increases will pressure corporate earnings, and thus share prices. However, there's also an unwillingness to abandon stocks, since once the Fed has stopped raising rates, there's the potential for stocks to rally.

The overall market was mostly unmoved by the latest influx of monthly retail sales reports. While the reports were somewhat disappointing, investors may have thought a drop in spending could prompt the Fed to hold off on further rate increases.

Movers

Merck was down $1.15, to $34.84, after a New Jersey jury said the company hid the potential dangers of its painkiller Vioxx and awarded a plaintiff $5.4 million in damages.

Wal-Mart Stores fell 31 cents, to $46.56. The retailer said its same-store sales, or sales at outlets open at least a year, rose a modest 1.4 percent.

Costco Wholesale added $1.45, to $56.59, as it saw monthly same-store sales rise 7 percent.

Gap fell 9 cents, to $18.57. Same-store sales at the clothing retailer tumbled 13 percent.

3M climbed $3.92, to $81.38, after the company lifted its first-quarter earnings forecasts due to strong sales in its industrial, consumer, safety and electronics businesses.

Indexes

New York Stock Exchange composite index fell 9.35, to 8359.82.

American Stock Exchange index rose 19.64, to 1975.63.

Russell 2000 index of smaller-company stocks fell 0.03, to 766.23.

Volume

NYSE: 2.36 billion shares, down from 2.44 billion on Wednesday. Decliners outnumbered advancers 4 to 3.

Nasdaq: 2.18 billion shares, up from 2.02 billion. Decliners narrowly outnumbered advancers.

Commodities

Crude oil for May delivery: $67.94, up 87 cents.

Gold for current delivery: $595.20 a troy ounce, up from $587.90 on Wednesday.