Wall Street sinks on energy's slide and recession worry
NEW YORK (Reuters) - Stocks fell more than 1 percent on Thursday as bulging oil inventories deflated energy shares and the weakest reading on mid-Atlantic manufacturing since 2001 added evidence the economy was in recession.
Oil slid from a record $101 a barrel a day earlier after news that U.S. oil stockpiles had climbed more than expected. Shares of oil producer Chevron Corp (CVX.N), which joined the Dow industrials on Tuesday, dropped 1.8 percent, while an S&P energy index .GSPE fell 2.1 percent.
Earlier, the Philadelphia Federal Reserve Bank said an index of manufacturing shrank again in the U.S. mid-Atlantic region, in its worst reading in seven years. The data is the latest in a series of indicators pointing to a sharp economic slowdown and the possibility of recession.
Shares of companies that follow the economy's cycles were among the biggest decliners, including General Electric Co (GE.N), down 1.1 percent to $33.69, and Boeing Co (BA.N), down 2.4 percent at $82.01.
"The Philly Fed index came in much weaker than expected. It basically took the steam out of the market, and it's been pretty much straight down since then. The buyers just kind of walked away," said Fred Dickson, market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.
"Oil pulled back ... (but) we're back into the reality that the economy is slowing and inflation is perking up."
The Dow Jones industrial average .DJI tumbled 142.96 points, or 1.15 percent, to end at 12,284.30. The Standard & Poor's 500 Index .SPX slid 17.50 points, or 1.29 percent, to 1,342.53. The Nasdaq Composite Index .IXIC dropped 27.32 points, or 1.17 percent, to 2,299.78.
U.S. crude oil for April delivery fell $1.47 to settle at $98.23 a barrel.
Energy companies' shares, however, are still up nearly 2 percent for the week.
The stock of oil-field services company Schlumberger Ltd (SLB.N) slid 2.5 percent to $83.91 on the New York Stock Exchange.
Financial shares, which have been hit by losses related to the subprime mortgage crisis, also led the market lower. Shares of Bank of America Corp (BAC.N) fell 1.8 percent to $42.21. On Tuesday, the banking company's stock became one of the 30 that make up the blue-chip Dow average.
The tightening credit market also hurt stocks of for-profit education companies.
On the Nasdaq, Career Education Corp (CECO.O) lost 10.2 percent to $15.71 after it said tightening credit conditions will cut into its 2008 operating income by $40 million to $60 million.
Apollo Group Inc (APOL.O), which runs the University of Phoenix, said on Thursday it was seeing more student loan applications rejected by lenders. Its stock, which helped lead the Nasdaq's decline, fell 8.6 percent to $63.21. For details, see ID:nN21468348
Trading was moderate on the New York Stock Exchange, with about 1.4 billion shares changing hands, below last year's estimated daily average of roughly 1.9 billion, while on Nasdaq, about 2.3 billion shares traded, above last year's daily average of 2.17 billion.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 3 to 1 and on Nasdaq, by about 5 to 2.
(Editing by Jan Paschal)
