IE 11 is not supported. For an optimal experience visit our site on another browser.

Wall Street ends lower as energy prices ease

Wall Street finished a difficult week lower Friday as investors, restrained by uncertainty about the economic impact of Hurricane Katrina, had little reaction to a sharp decline in oil prices and less unemployment.
/ Source: The Associated Press

Wall Street finished a difficult week lower Friday as investors, restrained by uncertainty about the economic impact of Hurricane Katrina, had little reaction to a sharp decline in oil prices and less unemployment.

The market fluctuated in Friday’s session on news that unemployment reached a four-year low, and as energy prices retreated on signs that allied nations will help cushion a U.S. oil shortage. The numbers, however, were shadowed by fears that Katrina’s devastation of the Gulf coast could trigger a sharp economic downturn.

“I consider this event as critical, if not more economically damaging, as Sept. 11, 2001,” said Paul McManus, senior vice president at Independence Investment LLC. “We have no idea what the extent of the damage is down there, and we may not know until next week.”

Wall Street felt some relief from a drop in oil and gasoline prices, which fell for the first time this week after the government and members of the Paris-based International Energy Agency said they would tap reserves to counter disruptions to 90 percent of oil production in the Gulf of Mexico.

After wavering throughout the session the Dow Jones industrial average was down 12.26 points, or 0.1 percent, at the close, while the broader Standard & Poor’s 500-stock index was down 3.57 points, or 0.3 percent. The Nasdaq composite index lost 6.83 points, or 0.3 percent.

Investors largely ignored a report from the Labor Department showing that the 169,000 jobs created in August were fewer than the 190,000 predicted by economists, even as the job growth pushed unemployment down to a low of 4.9 percent from 5 percent the month before.

But interpreting the data — coupled with several lackluster reports earlier this week — was complicated by the worsening situation in Katrina’s wake. Many fear the aftermath of the storm will exacerbate a slowdown already happening in the economy and persuade the Federal Reserve to halt its string of interest-rate hikes.

“Confidence is slipping, manufacturing is slowing, and even with today’s jobs report, the employment trend is still negative,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “The bet here is that the Federal Reserve will have to stop raising rates in order to keep the economy from sliding further.”

Across the country, consumers are already reeling from the storm’s fallout, which has severely limited gas supplies and boosted retail prices to levels well above $3 a gallon. And with no sign when shipping terminals along the Gulf Coast — some of the nation’s most active — will resume operation, Wall Street is bracing for the worst.

“I don’t think people appreciate the importance of the [Gulf Coast] region to the U.S. economy,” said McManus, who sees economic activity declining for a month or two. “It’s going to be felt really hard.”

Nonetheless, the market stood its ground and managed modest gains during a week when crude oil surged past $70 a barrel. The Dow rose 0.5 percent for the week, while the S&P 500 index added 1.1 percent and the Nasdaq climbed 1 percent.

In corporate news, Boeing Co.’s largest union went out on strike Friday, shutting down airplane production for the first time in 10 years. The International Association of Machinists and Aerospace Workers rejected a proposed three-year deal, saying the airline ignored demands for higher pensions, stronger job security and better health benefits. Boeing declined $1.65 to close at $64.34.

Airlines also came under more pressure from the recent surge in oil prices. Late Thursday, Northwest Airlines Corp. warned it could lose as much as $400 million this quarter as greater spending on jet fuel pushes the troubled air carrier dangerously close to bankruptcy. Northwest’s mechanics are still on strike, but its pilots said they would negotiate a new round of pay cuts. Northwest dropped 34 cents to $3.63.

Elsewhere, Albertson’s Inc. jumped $2.32, or 11.2 percent, to $23.05 after the nation’s second-largest supermarket chain said it was considering putting itself on the auction block. While Albertson’s first-quarter profit nearly tripled in June, the company’s sales have lagged many of its rivals since a massive 2003 strike in southern California crippled its business.

Overseas, Japan’s Nikkei stock average rose 0.7 percent. In Europe, Britain’s FTSE 100 dropped 0.03 percent, Germany’s DAX index fell 0.1 percent and France’s CAC-40 was lower by 0.4 percent.