Stocks ended Wednesday's session lower as oil prices rose to a record closing high on fears that a tropical storm that could disrupt supply may be on the way. Concern about the oil price outweighed a record 6.5% jump in July new home sales, says Standard & Poor's MarketScope.
The Dow Jones industrial average fell 84.71 points, or 0.81%, to 10,434.87. The broader Standard & Poor's 500 index lost 8.00 points, or 0.66%, to 1,209.59. The tech-heavy Nasdaq composite was down 8.34 points, or 0.39%, moving to 2128.91.
Thursday is a light day on the economic calendar. A report on initial jobless claims for last week is expected to show 315,000 claims, down from 316,000 the previous week. Among the companies reporting earnings Thursday is computer networking group Novell (NOVL).
In economic news Wednesday, durable goods orders fell 4.9% in July, after rising by 1.9% in June (which was revised downward from the original 2.8%), the Commerce Department said. The fall was much steeper than the 1% to 1.4% drop that economists were expecting.
Meanwhile, July new home rose 6.5% to a record 1.410 million units in July, after a 2% gain in June to 1.324 million (revised from the original figure of 1.374). The figure was stronger than 1.33 million units expected.
Crude oil prices settled up $1.61 to a record high of $67.32 per barrel level on concerns that a Tropical storm Katrina in the Bahamas will turn into a hurricane and cause supply disruptions, said Standard & Poor's Marketscope. Earlier, the weekly Department of Energy inventory report showed crude stocks rose 1.85 million barrels last week. Gasoline inventories, however, fell by 3.2 million barrels, more than expected, while distillate fuel increased by 1.4 million barrels.
In corporate news, General Motors (GM) gained 2.5% on a Wall Street Journal report that the United Auto Workers union is considering helping the carmaker cut costs.
Google (GOOG) announced that it is introducing an instant-messaging service that will allow users to send text messages and make voice calls over computers.
Internet service provider America Online, a division of Time Warner (TWX), agreed to pay $1.25 million and change some of its practices to settle an investigation by New York Attorney General Elliot Spitzer's office. About 300 customers had complained to Spitzer that AOL ignored requests to cancel services.
Anglo-Australian mining giant BHP Billiton (BHP) reported Wednesday that its full-year net profit rose 89% to 6.4 billion, but the company said in a statement that commodity prices in the future will ease from their current highs.
Nursing-home operator Beverly Enterprises ((BEV) said that it has accepted a higher takeover bid of $13 per share, or $1.65 billion, from North American Senior Care Inc. Beverly last week voted to accept an offer of $12.80 per share from North American Senior Care, but on Friday an investor group raised the stakes by making a $12.90 unsolicited offer. The total transaction, including the assumption of debt, is valued at $1.9 billion.
After the close Tuesday, restaurant chain Applebee's (APPB) said its same-store restaurant sales fell 1.5% in August and cut its third-quarter outlook. The company expects third-quarter earnings to come in at a range of 32 cents to 35 cents per share, down from original guidance of 37 cents to 39 cents per share.
Chinese web search company Baidu (BIDU), in its first report since become a public company earlier this month, said Tuesday that its second-quarter net income grew to 12.1 million yuan, or $1.5 million, in the period last year.
Long-dated Treasuries prices rose late in the session to close slightly higher. The yield on the benchmark 10-year note was at 4.17%.
European stock markets closed lower Wednesday. London's Financial Times-Stock Exchange 100 index fell 25.00 points, or 0.47%, to 5,275.20.
Germany's DAX index lost 1.79 points, or 0.04%, to 4,915.95.
In Paris, the CAC 40 index fell 12.13 points, or 0.27%, moving to 4,424.43.
Asian markets finished mixed Wednesday. Japan's Nikkei 225 index added 29.33 points, or 0.24%, to 12,502.26.
In Hong Kong, the Hang Seng index fell 100.04 points, or 0.67%, to 14,873.85.