Oil price fuels Wall Street selling (Reuters)

NEW YORK (Reuters) – Concerns that rising oil prices could hurt economic recovery prompted investors on Tuesday to sell stocks and hedge against further declines.

The CBOE Volatility Index VIX (.VIX), Wall Street's so-called fear gauge, jumped 14.5 percent to 21.01 on growing uncertainty about oil. The index measures the cost of using options as insurance against a decline in the S&P 500 (.SPX) index.

"We've been seeing how quickly the VIX can spike up, and there is no reason to believe that it won't double from where it is now," said Harry Rady, CEO of Rady Asset Management in San Diego, California.

Brent crude rose above $116 a barrel as supply disruptions persist and political violence spreads in the Middle East and North Africa. Higher oil translates into increased energy and gasoline costs for consumers.

U.S. crude and gasoline futures extended gains in extended-hours trading after data showed domestic crude inventories unexpectedly fell. U.S. stock index futures fell slightly, with S&P futures off 3.3 points.

Federal Reserve Chairman Ben Bernanke said the recent surge in oil was unlikely to derail the economy, but his comments did little to reassure investors worried that turmoil in the Middle East could hit Saudi Arabia, the world's largest oil exporter. The Dow Jones Transports index (.DJT) fell 2.5 percent.

Stocks have taken their cue from oil since the start of turmoil in the Middle East and North Africa in January. The S&P had its weakest performance since November last week but still tallied three months of gains.

The Dow Jones industrial average (.DJI) fell 169.38 points, or 1.39 percent, at 12,056.96. The Standard & Poor's 500 Index dropped 21.04 points, or 1.59 percent, to 1,306.18. The Nasdaq Composite Index (.IXIC) lost 44.86 points, or 1.61 percent, to 2,737.41.

About 8.67 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, higher than last year's daily average of 8.47 billion. Volume has recently been solid on days when the market falls, but often comes under 7 billion on up days.

Investors took a cautious stance as cyclical sectors experienced the biggest losses, while defensive sectors such as utilities, healthcare and consumer staples limited losses.

Wal-Mart Stores Inc (WMT.N) and Coca-Cola Co (KO.N) helped the Dow to limit losses. Wal-Mart rose 0.2 percent to $52.06, while Coca-Cola was up 1.5 percent to $64.91.

Gasoline and heating oil futures each gained about 3.5 percent to $3. The S&P's materials (.GSPM) index dropped 2.3 percent while the industrials (.GSPI) dropped 2.2 percent. According to AAA, the national average price of regular unleaded gasoline is currently at $3.35 per gallon.

"The real story is gasoline," said Nick Kalivas an analyst, at MF Global in Chicago. "The market is getting worried that you could see $4 gasoline in the U.S."

Financial stocks came under pressure after JPMorgan Chase & Co (JPM.N) said it could face "material" fines and "significant" legal costs from a wide-ranging probe into the industry's foreclosure practices.

JP Morgan fell 2.3 percent to $45.60 while the KBW bank index (.BKX) fell 2.3 percent.

Declining stocks outpaced advancing stocks on the NYSE by a ratio of about 3 to 1, while on the Nasdaq, decliners beat advancers by a ratio of 10 to 3.

(Reporting by Angela Moon, Editing by Kenneth Barry)

View the original article here

Wall Street dips as investors eye Libya, oil (Reuters)

NEW YORK (Reuters) – Stocks fell for a second day on Wednesday as protests in Libya drove up oil prices, fueling concerns about further unrest in the Middle East.
The S&P 500 slid 2.1 percent on Tuesday, suffering its worst session since August, and analysts said the market's long-awaited pullback may be here.
Hewlett-Packard Co cut its 2011 revenue forecast on slipping consumer demand for its personal computers, pushing its stock down almost 10 percent and dragging on the Dow,
Covering short positions helped limit Wednesday's losses, said Chris Burba, short-term market technician at Standard & Poor's in New York.
"But odds favor downside in the near term ... The pace of the advance is slowing and that behavior often precedes a consolidation or a downturn," he said.
The S&P 500 has climbed 25 percent since the start of September, when the recent rally began.
Oil futures in New York jumped to the loftiest level for front-month crude since October 2, 2008, amid worries over supply disruptions in Libya, a top oil producer.
While higher oil prices often boost energy-sector shares, they usually drag on the overall stock market. Higher energy costs tend to ripple through the economy, pushing up the costs of utilities, manufactured goods and transportation.
A senior aide to Libyan leader Muammar Gaddafi's influential son Saif resigned as an Italian official claimed as many as 1,000 people have been killed in the government crackdown.
"Higher oil prices certainly are a concern. That has an impact on real economic activity, but while it is something to monitor, I'm not sure the market has fully incorporated significantly higher prices just yet," said Mike Morcos, senior money manager at Old Second Wealth Management in Aurora, Illinois.
Technology shares led losses after Hewlett-Packard (HPQ.N) trimmed its revenue forecast late Tuesday, citing weak consumer demand for personal computers and posted a lackluster showing from its services arm. The stock sank 10.2 percent to $43.33.
The Dow Jones industrial average (.DJI) was down 61.11 points, or 0.50 percent, at 12,151.68. The Standard & Poor's 500 Index (.SPX) was down 5.93 points, or 0.45 percent, at 1,309.51. The Nasdaq Composite Index (.IXIC) was down 25.11 points, or 0.91 percent, at 2,731.32.
Brent and U.S. crude oil futures gained further ground on worries about supply disruptions as the revolt raged in Libya raged.
An energy-sector index (.GSPE) rose 2.2 percent and kept the S&P 500's loss in check.
U.S. existing home sales rose unexpectedly in January, but home prices fell to their lowest level in nearly nine years, the National Association of Realtors said.
(Reporting by Caroline Valetkevitch; Additional reporting by Rodrigo Campos and Ryan Vlastelica; Editing by Jan Paschal)
View the original article here