| Nov 1 09:58 AM US/Eastern By JOE BEL BRUNO AP Business Writer |
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| NEW YORK (AP) – Wall Street plunged in early trading Thursday as surging oil prices and slower growth in consumer spending erased optimism about the Federal Reserve’s positive take on the economy just a day earlier. The Dow Jones industrials skidded nearly 200 points.Inflation fears revived as crude oil vaulted to a record $96 a barrel. Meanwhile, a report from the Commerce Department indicated consumers scaled back their spending in September as worries mounted about a worsening housing market and further credit market turmoil.That combination led investors to retreat from Wednesday’s rally, in which the Dow climbed 137 points after the Fed, while cutting interest rates a quarter point, said the economy had weathered the summer’s credit crisis. The assessment put temporarily put to rest Wall Street’s concerns that tighter credit was crippling the economy.
But the Fed also warned that inflation remained a concern, and oil’s ascent to $96 a barrel earlier Thursday raised the prospect not only that the Fed might stop cutting rates, but that it might actually consider raising rates. Stocks also moved lower after Exxon Mobil Corp., the world’s biggest oil company, posted a second-straight retreat in quarterly profit for the first time in five years. Citigroup Inc. and Bank of America Corp., the two biggest U.S. banks, were downgraded by CIBC on worries about the credit markets—causing financial stocks to tumble. The Dow plunged 193.63, or 1.39 percent, to 13,736.38 and earlier was off more than 200. The Standard & Poor’s 500 index was off 22.77, or 1.47 percent, at 1,526.61, while the Nasdaq composite index dropped 32.42, or 1.13 percent, to 2,826.20. Investors pulling money out of stocks turned to the safe haven of the Treasury market. The yield on the 10-year Treasury note fell to 4.41 percent from 4.47 percent late Wednesday. |
