Oil Ripples Push Stocks Lower

Investors pushed stocks to their lowest levels in more than a month Friday as Wall Street worried about the long-term effects of high oil prices on the economy. Volume was very high as investors restocked their portfolios due to a reshuffling of the Standard & Poor’s 500 index and the expiration of stock futures and options contracts.

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Investors pushed stocks to their lowest levels in more than a month Friday as Wall Street worried about the long-term effects of high oil prices on the economy. Volume was very high as investors restocked their portfolios due to a reshuffling of the Standard & Poor’s 500 index and the expiration of stock futures and options contracts.

With analysts warning that oil prices could pressure business margins — and Continental Airlines Inc. coming out with drastically lower earnings estimates due to high oil prices — investors were faced with the task of adjusting their portfolios to the new economic realities. Oil prices climbed higher with a barrel of light crude rising to a record 32 cents to settle at $56.72 on the New York Mercantile Exchange.

“Even if we were to see a quick pullback in oil, I don’t think that’ll reverse the trend, and there are still some negative implications for the market,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research in Cincinnati. “I think you’ll start to see companies, like the airlines, fessing up to the fact that these oil prices are going to hurt.”

In late afternoon trading, the Dow Jones industrial average fell 47.81, or 0.4 percent, to 10,578.54, its lowest point since Feb. 1.

Broader stock indicators also lost ground. The S&P 500 was down 5.08, or 0.4 percent, at 1,185.13, its lowest level since Feb. 22. The Nasdaq composite index lost 15.56, or 0.8 percent, to 2,000.86, poised to close at its lowest level since Nov. 2.

Trading was very brisk as mutual funds tracking the S&P 500 adjusted their holdings. The index was rebalanced to more accurately reflect the number of shares of each company available in the market. It was also “triple witching day” on Wall Street, in which investors cash in options and futures contracts and offer new ones.

Rising oil prices plagued the markets all week, reaching a record close on Wednesday and again Friday, and an intraday high above $57 per barrel on Thursday. All three major stock indexes were likely to finish the week substantially lower.

Bonds fell along with stocks Friday, with the yield on the 10-year Treasury note climbing to 4.51 percent, up from 4.46 percent late Thursday. The dollar gained ground against most major currencies, while gold prices fell.

“The fact that bonds are falling has the markets a little worried,” said Bryan Piskorowski, market analyst at Wachovia Securities. “The past couple times that oil spiked, bonds rose higher and the equity investors took solace in that. Now you’ve got to wonder if bonds are feeling the effects of inflation as well.”

Citigroup lost 94 cents to $46.30 after the Federal Reserve warned the Dow industrial it needs to do a better job of regulatory oversight. In a report that ultimately approved Citigroup’s takeover of First American Bank, the Fed said future deals could be in jeopardy if Citi doesn’t do a better job of adhering to regulations.

Mortgage broker Fannie Mae added 35 cents to $54.85 despite an announced delay in filing its annual report with the Securities and Exchange Commission. The company has struggled to restate its inflated earnings, and an additional $2.4 billion in losses could be added to the previous fiscal year.

Apple Computer Inc. added 28 cents to $42.53 after an analyst at Morgan Stanley increased her rating of the company to “overweight” from “equal weight.” Morgan Stanley believes the company will be able to leverage its popular iPod music players to increase sales of its Mac personal computers.

Oracle Corp. shed 50 cents to $12.66 after the company said Harry You, its chief financial officer, is resigning. The departure comes as Oracle works to assimilate PeopleSoft Inc. after its $10.3 billion acquisition. Oracle also increased its bid for software maker Retek Inc., topping German software company SAP AG’s previous bid. Retek slipped 21 cents to $11.44, while SAP slid 27 cents to $39.98.

Handheld computer maker PalmOne Inc. posted a profit for its fiscal third quarter, but warned that its fourth-quarter results would fall below Wall Street’s expectations due to delays in introducing new products. PalmOne dropped $1.94, or 8.1 percent, to $22.11.

Continental Airlines lost 20 cents to $10.56 after the airline said it will take a loss in the first quarter and could incur a large loss for all of 2005. Skyrocketing fuel prices have eaten into the company’s revenues, and the airline said its April bookings are slightly less than last year.

Declining issues outnumbered advancers by more than 8 to 5 on the New York Stock Exchange, where volume came to 1.46 billion shares, compared with 1.24 billion at the same point on Thursday.

The Russell 2000 index of smaller companies was down 4.37, or 0.7 percent, at 621.09.

Overseas, Japan’s Nikkei stock average rose 0.89 percent. In Europe, Britain’s FTSE 100 was up 0.02 percent, France’s CAC-40 climbed 0.46 percent for the session, and Germany’s DAX index gained 0.26 percent in late trading.