NEW YORK-US stocks fell late yesterday as a spike in oil prices revived worries that inflation would derail the recovery, jolting a market that had been treading water ahead of corporate earnings.The uncertain outcome of budget talks in Washington and the prospect of a US government shutdown as a midnight deadline loomed spurred investors to buy protection ahead of the weekend. Many traders bought short-term put options on the SPDR S&P 500 Trust (SPY.P)."The tape is heading south in light volume. People are hoping that nothing bad happens over the weekend," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.
The surge in oil prices drove down shares of airlines and transportation companies. The Arca Airline index shed 2.7 per cent and the Dow Jones Transportation Average fell 1.7 per cent.Brent crude futures settled above US$126 a barrel, the highest level in 32 months, as the weak dollar drove up commodities and intense fighting in Libya raised fears of prolonged supply cuts.Trading volumes remained low, a sign that investors are holding off major new bets ahead of the release of quarterly earnings beginning next week.
The Dow Jones industrial average was down 29.59 points, or 0.24 per cent, at 12,379.90. The Standard & Poor's 500 Index was down 5.36 points, or 0.40 per cent, at 1,328.15. The Nasdaq Composite Index was down 15.73 points, or 0.56 per cent, at 2,780.41.For the week, the Dow rose 0.03 per cent while the S&P 500 and Nasdaq each lost 0.3 per cent.Trading volume was 6.47 billion shares on the New York Stock Exchange, NYSE Amex and Nasdaq, compared with last year's estimated daily average of 8.47 billion. (AP)