updated 8/20/2004 8:03:09 AM ET 2004-08-20T12:03:09

With the much-ballyhooed initial public offering of Google Inc. behind them and oil chugging to a new record high, investors took a step back Thursday, sending stocks lower.

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The downward trend underscored that the equity market is deeply mired in the trading doldrums characteristic of late summer, though analysts noted there are additional pressures this year. Fears that the Olympics in Athens or the upcoming Republican convention in New York might be targets of terrorism have kept an unusual number of investors on the sidelines, and oil prices aren’t helping, said Janna Sampson, director of portfolio management at Oakbrook Investments.

“People are thinking there is just no good reason to take on this risk,” Sampson said. “I know I’ve got clients who are telling me they have money but they’re waiting until after these things are over. And we don’t often see institutional investors holding up for events.”

At the close, the Dow Jones industrial average was down 42.33 points, or 0.4 percent, at 10,040.82, while the broader Standard & Poor’s 500-stock index was off 3.94 points, or 0.4 percent, at 1,091.23. The technology-rich Nasdaq composite index finished the day down 11.48 points, or 0.6 percent, at 1,819.89.

Oil prices soared $1.48 to $48.75 on the New York Mercantile Exchange, despite assurances from Iraq that it would resume full exports from its southern terminals. Further rattling traders, a radical Iraqi cleric rejected an offer to peacefully end his militia group’s two-week-old standoff in the holy city of Najaf.

In economic news, the number of Americans filing new claims for unemployment benefits fell for a third consecutive week, suggesting improvements in the labor market after a rough patch earlier this summer. But analysts pointed out that the figures do not include the impact of Hurricane Charley, which will be reflected in next week’s data.

Separately, a measure of future economic activity fell in July for the second consecutive month, reinforcing other data that indicates the recovery is slowing. The decline in the Conference Board’s Index of Leading Economic Indicators reflects growing concerns about rising costs for energy and food, as well as worries about future economic growth.

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In addition to energy prices, which have raised worries about inflation and the prospect of corporate earnings growth in the second half, weaker forecasts from software companies have weighed heavily on the market. With many shares oversold after weeks of sluggish trading, the bounce seen during the previous four sessions could simply have been a counter rally, analysts said.

“Some of the market’s bellwethers are technology issues, and they’re very sensitive to the economy,” said Steven Goldman, chief market strategist with Weeden & Co. in Greenwich, Conn. “If there is a shadow of doubt, investors become risk-averse. And tech stocks have a very difficult time in an uncertain environment.”

Google, which set its final IPO price at $85 late Wednesday — far lower than previously forecast — began trading shortly before noon, and closed up $15.34 at $100.34. Other search engines, closely watched as Google comes to market, posted declines: Yahoo! Inc. was down 37 cents at $28.11 and Ask Jeeves Inc. fell 4 cents to $26.04.

Amazon.com Inc. was down 73 cents at $38.63 after announcing plans to buy China’s largest online retailer, Joyo.com Ltd., a deal valued at $75 million. Joyo.com sells books, movies, music and gifts and has an estimated 80 million customers.

Delta Air Lines shed a penny to $4.06 after the struggling carrier said more job cuts are ahead as it tries to avoid bankruptcy court. High wages and rising fuel costs have hurt the nation’s third-largest carrier, which has faced stiff competition from low-fare airlines.

Canadian telecom equipment giant Nortel Networks Corp. added 14 cents to $3.74 after it announced plans to slash its work force by 10 percent as it struggles to recover from an accounting scandal.

Volume was light. Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange.

Overseas, Japan’s Nikkei stock average finished 1.2 percent higher Thursday. In Europe, France’s CAC-40 added 0.1 percent, Britain’s FTSE 100 rose 0.2 percent and Germany’s DAX index lost 0.1 percent.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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