The Dow Jones industrial average dropped back below the 10,000 mark today as crude oil prices climbed to within a few cents of the dreaded $50 a barrel.
Crude traded as high as $49.75 on the New York Mercantile Exchange and closed up 74 cents at $49.62 a barrel -- the latest in a long line of record high prices.
Oil experts who have been predicting $50 a barrel oil for months now are warning that $60 oil could be on the way because U. S. supplies are continuing to fall and world oil production keeps getting hit by one problem after another. Last week it was the damage done by hurricanes in the Gulf of Mexico that spooked the market; this week it is rebel attacks in Nigeria that are threatening to cut exports from that country.
As oil keeps hitting new highs, the psychological impact spreads and the impact on the economy grows. Economists who hailed falling oil prices only a few weeks ago now are warning that the threat to economic growth has returned.
The Dow opened slightly lower, but the losses accelerated late in the session and the index dropped 59 points to 9,988.54. The blue chip index last traded below 10,000 five weeks ago.
The Standard & Poor's 500 stock index fell almost seven points to 1,103.52. The Nasdaq Stock Market composite index slipped almost 20 points to 1,859.88.
Airline stocks were among the days biggest losers, falling because of concern that ever-increasing fuel costs -- up 63 percent in the past 12 months -- are compounding the problems of the troubled industry. The unusually severe hurricane season also has badly damaged the struggling carriers, forcing them to cancel thousands of flights. Nine out of 10 airline stocks were down for the day.
Insurance stocks also fell because of the hurricanes.