Oil surge, bank jitters sink Wall Street

CEAT Kelani Holdings Managing Director Ravi Dadlani (right) and Lanka Ashok Leyland CEO Umesh Gautham exchange the OEM agreement

NEW YORK, June 11, 2008 (AFP) – Wall Street tumbled Wednesday as the latest spike in crude oil prices undermined sentiment in a market already spooked by inflation and troubles in the finance sector.

The Dow Jones Industrial Average sank 205.99 points (1.68 percent) to close at 12,083.77 and the Nasdaq composite slumped 54.93 points (2.24 percent) to 2,394.01.

The Standard & Poor’s 500 broad-market index retreated 22.95 points (1.69 percent) to finish at 1,335.49.

The slump came as traders “focused on inflation, higher oil prices, a lower dollar, and the prospect for higher interest rates around the world,” said Al Goldman at Wachovia Securities.

New York’s main oil futures contract, light sweet crude for July delivery, jumped 5.07 dollars to close at 136.38 dollars per barrel, amid news of a sharp drop in US inventories.

The stock market remained on edge in the wake of worries about the banking sector after Lehman Brothers’s news that it needs fresh capital. Also keeping investors on the defensive was a worry that the new focus on inflation by the Federal Reserve may mean higher interest rates.

“If there is a theme, it appears to be fear over inflation driven by higher

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