U.S. stocks plunged on Tuesday after oil soared to nearly $130 a barrel fueling concerns that commodity prices will further dampen U.S. consumption levels, while analysts forecast more credit losses and faster inflation.
Crude oil soared to a new record of $129.60 a barrel, led by weakness in the dollar and supply concerns. Consumer-related stocks were among the worst decliners early on Tuesday. Chevron and Exxon Mobil were among the few rising stocks on the Dow.
The S&P 500 lost 10.76 points, or 0.8 percent, 1,415.87 at 1:18 p.m. in New York. The Dow Jones Industrial Average slid 181.49, or 1.4 percent, to 12,846.67. The Nasdaq Composite Index dropped 21.42, or 0.9 percent, to 2,494.67.
Before the market opened today, inflation concerns rose after a report showed wholesale prices outside of food and energy rose the most in around 17 years. Core producer prices, which exclude food and energy, rose a higher-than-expected 0.4 percent in April, or 3 percent year-on-year. This was the fastest rise since late 1991.
Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. led financial shares to a third straight decline after Oppenheimer & Co. analyst Meredith Whitney said banks may write off more than $170 billion of additional reserves by the end of 2009.
The Oppenheimer analysts cut their estimates for 2008 earnings for Bank of America, Citigroup, JPMorgan, Wachovia Corp. and Wells Fargo & Co. by an average of 17 percent, and reduced their 2009 estimates by 20 percent.
JPMorgan lost $1.92, or 4.2 percent, to $44.07, while Citigroup lost 70 cents to $22.29.
Fueling concerns over the state of the economy and the drop in consumer spending, Home Depot said its profit fell 66 percent as home values continue to plummet, which results in slower sales in housing renovations.