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Dow Drops Over 100 Points as Iraq Fighting Raises Oil Prices

 / Updated  / Source: CNBC.com
Stocks fell on Thursday as oil prices rose because of fighting in Iraq. Troops were deployed outside of the oil-rich city of Kirkuk, which was attacked by militants.Anadolu Agency / Getty Images Contributor

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Stocks dropped on Thursday, with the Dow plunging over 100 points for a second day, as fighting in Iraq heightened concerns about rising oil prices, which hit their highest this year.

The Dow Jones Industrial Average closed unofficially 109 points lower, the S&P 500 lost 13 points and the Nasdaq dropped 34 points.

Oil prices rose on worry of supply disruptions amid a Sunni militant uprising in Iraq that had rebels controlling two cities and the Wall Street Journal reporting that Iran was sending elite troops to help the Iraqi government fight the rebellion. President Barack Obama said he would not rule out the use of airstrikes to help Iraq's government.

Brent futures rose above $112.40 a barrel -- the highest this year.

Domestically, retail sales rose less than expected in May, according to Commerce Department data, which had sales up 0.3 percent last month and the prior month revised higher to 0.5 percent.

In gauging "retail sales or the offshoot of what is going on in Iraq, which is sending energy prices higher, I'd say the latter" is having more of an impact on equities, said Art Hogan, chief market strategist at Wunderlich Securities.

Other economic reports Thursday had the number of Americans filing new claims for jobless benefits unexpectedly rising last week, although not enough to alter the view of a labor market that is picking up steam.

And, the Labor Department reported import prices rose 0.1 percent last month after declining 0.5 percent in April. Also, the Commerce Department reported inventories rose 0.6 percent in April and picked up excluding cars, boosting expectations of increased economic growth in the second quarter.

The dollar fell against the currencies of major U.S. trading partners and the 10-year Treasury yield, used to figure mortgage rates and other consumer loans, fell 2 basis points to 2.621 percent.

Shares of Lululemon Athletica dropped more than 15 percent to a three-year low after the Canadian yoga wear retailer reduced its revenue and earnings forecast for the fiscal year and said its CFO would retire early next year.

Twitter shares gained after the micro-blogging service said Ali Rowghani had resigned as chief operating officer, effective Thursday.

Stocks declined on Wednesday, with benchmark indexes retreating from all-time highs, after the World Bank lowered its outlook for global growth.

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