Another record high for oil prices and a sharp drop in consumer spending rattled investors Tuesday, sending stocks lower and halting a five-session winning steak for the Dow Jones industrial average. Technology stocks suffered the worst damage.
The market, already fretting over the impact of fuel costs on corporate profits, took another blow as U.S. crude prices jumped above $44 a barrel for the first time.
"It is built into the price of everything," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee. "As a result, it could raise the cost of products, which is inflationary, and cut into earnings, he said. "It's that basic . . . that far-reaching."
The Dow fell 58.92, or 0.6 percent, to 10,120.24. The decline halted the Dow's longest winning streak since November. The Nasdaq composite index fell 32.67, or 1.7 percent, to 1859.42. The Standard & Poor's 500-stock index fell 6.93, or 0.6 percent, at 1099.69.
The Commerce Department reported that consumers slashed their spending in June by the largest amount in three years, reinforcing other recent indications that the economic recovery slowed at the end of the second quarter. The report said consumer spending dropped by a sharp 0.7 percent in June from the previous month.
"We're not getting much in the way of good economic news, so I've been a little bit surprised that the market has been as resilient as it has," said Bernie Schaeffer, chairman of Schaeffer's Investment Research in Cincinnati. He also expressed concern that investors didn't react more enthusiastically to the recent tide of corporate earnings reports.
Richard E. Cripps, chief market strategist for Legg Mason in Baltimore, said the fact that Tuesday's decline wasn't worse bodes well for coming sessions.
"The market is indicating that the selling we had in July has pretty much run its course; it was a pretty vicious month," he said. "If we can get oil prices down a buck or two, we'll see a nice market gain."
Technology shares took the Nasdaq lower and figured prominently among the Dow's decliners, with International Business Machines falling 98 cents, to $85.71, and Intel falling 73 cents, to $24.17, after A.G. Edwards lowered its ranking on the semiconductor industry.
The Dow's biggest decliner was Caterpillar, which fell $1.42, to $71.68. Rising crude prices helped Exxon Mobil buck the trend, gaining 64 cents, to $46.89.
Shares in Martha Stewart Living Omnimedia Inc. fell 15 cents, to $11.25, after the company posted a wider-than-expected loss for the second quarter and warned of bigger-than-expected losses in the third quarter.
Conglomerate Tyco International rose 17 cents, to $31.41, after the company said third-quarter profit surged 63 percent because of sharply lower production costs and double-digit revenue growth.
* The New York Stock Exchange composite index fell 23.69, to 6402.71; the American Stock Exchange index rose 2.00, to 1251.05; and the Russell 2000 index of smaller-company stocks fell 8.30, to 543.63.
* Declining issues outnumbered advancing ones by 5 to 4 on the NYSE, where trading volume rose to 1.34 billion shares, from 1.27 billion on Monday. On the Nasdaq Stock Market, decliners outnumbered advancers by 2 to 1 and volume totaled 1.48 billion, down from 1.53 billion.
* The price of the Treasury's 10-year note rose $1.88 per $1,000 invested, and its yield fell to 4.43 percent, from 4.45 percent on Monday.
* The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 110.56 yen, down from 110.80 late Monday, and a euro bought $1.2054, up from $1.2031.
* Light, sweet crude oil for September delivery settled at $44.15, up 33 cents, on the New York Mercantile Exchange.
* Gold for current delivery rose to $394.00 a troy ounce, from $391.70 on Monday, on the New York Mercantile Exchange's Commodity Exchange.