Nothing But Politics

[Rick Faurot]

Stocks Seen Lower as Oil Tops $54
Tue Oct 12, 2004 07:04 AM ET

NEW YORK (Reuters) - U.S. stock futures slid sharply early Tuesday, pointing to a weak open for the market as oil prices hit a record high for a sixth straight day, seen as bad for stocks because of the threat to corporate profits and consumer spending.

U.S. light crude (CLc1: Quote, Profile, Research) jumped almost 1.5 percent to touch a peak of $54.45 a barrel as the market worried about production restraints in the U.S. Gulf, Nigeria and Norway thwarting efforts to build winter heating oil inventories.

S&P 500 futures were down 8 points, below fair value accounting for dividends, interest rates and time to expiration on the contract, indicating the market would open lower. Dow Jones industrial index futures fell 64 points, while Nasdaq futures were down 15.5 points.

"We can't find a new high on oil prices and not pay attention to it. Even if we have good earnings news from Corporate America, there's the drag of higher energy prices," said Arthur Hogan, chief market analyst at Jefferies & Co. "Right now, the market is focusing on energy prices."

Stocks have held largely steady despite a 65 percent rise in the price of crude oil this year, with most markets stuck in a 10 percent trading range.

The spike in crude is a major concern for Wall Street, as higher energy costs squeezes profits from most companies, while a rise in fuel prices can curb consumer spending.