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Stocks Finish Lower

Stocks finished lower on Monday as the price of oil kicked above $67 on concerns Tropical Storm Rita may damage refineries on the Texas coast. Investors also hesitated ahead of the Federal Reserve meeting Tuesday.

The Dow Jones industrial average fell 84.31 points, or 0.79%, to 10,557.63. The broader Standard & Poor's 500 index was down 6.89 points, or 0.56%, to 1,231.02. The tech-heavy Nasdaq composite index lost 15.09 points, or 0.7%, to 2,145.26.

October West Texas Intermediate crude oil jumped $4.39 to $67.39 a barrel as Tropical Storm Rita headed for the Florida Keys and OPEC meets in Vienna to decide whether to raise official crude output. Gasoline futures climbed 25 cents to break back above $2 a gallon. A potential 2 million barrel per day output hike tomorrow from already tapped out OPEC provided little comfort, says Action Economics.

The price of gold surged to a 17-year high on back of inflation fears, says Standard & Poor's MarketScope.

This week's main event is the Federal Reserve meeting on Tuesday. Most economists expect the FOMC to boost the target rate another 25 basis points to 3.75%. The key is whether the Fed will change its strategy of measured rate hikes.

"We suspect the FOMC will retain its "accommodative" and "measured" language, indicating another 25 basis point move is coming in November," says Action Economics. "However, there could be some indication that policymakers are willing to move to the sidelines to assess conditions if data reflect a hit to the economy from Katrina."

Other than the Fed, housing starts will be released on Tuesday and leading indicators comes out on Thursday.

In earnings news Monday, Nike (NKE) posted first-quarter earnings per share of $1.61, vs. $1.21 a year ago, on an 8.4% revenue rise. The company says worldwide futures orders for athletic footwear, apparel, scheduled for delivery from September, 2005, to January, 2006, were up 11% from a year ago.

In tech, Bear Stearns downgraded eBay (EBAY) to peer perform from outperform.

On the merger front, Spinnaker Exploration (SKE) agreed to be acquired by affiliates of Norsk Hydro in a $2.6 billion deal, or $65.50 cash per share.

TBC Corp. (TBCC) agreed to be acquired by Sumitomo Corp. of America in a $1.1 billion deal, or $35 cash per TBC share.

Treasury Market

Treasuries yields turned south, just a day ahead of the Fed meeting, as energy prices spiked as Tropical Storm Rita prepared to enter the Gulf of Mexico and strengthen into a hurricane before taking aim at the Texas coast, says Action Economics.

World Markets

European stock markets finished mixed on Monday. London's Financial Times-Stock Exchange 100 index was up 21.8 points, or 0.4%, to 5,429.7.

Germany's DAX index fell 60.37 points, or 1.21%, to 4,926.13. German Chancellor Gerhard Schroeder refused to concede defeat in general election, hurting theeuro and stocks in Frankfurt.

In Paris, the CAC 40 index lost 3.81 points, or 0.08%, to 4,505.68.

Asian markets were closed for holidays on Monday.

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