Stocks Plunge as Oil Nears $100 a Barrel and Gold Hits Record High

Stocks fell sharply Tuesday with the Dow Jones Industrial Average suffering a triple-digit loss after oil prices once again flirted with $100 a barrel on fear that upheaval in North Africa and the Middle East could disrupt supplies.

The first trading day of the month is usually good to equities, but after a two-day respite, stocks went back back to suffering broad-based declines. The blue-chip Dow ($INDU) lost 168 points, or 1.4%, to close at 12,058. The broader S&P 500 ($INX) dropped 21 points, or 1.6%, to finish at 1,306. The tech-heavy Nasdaq Composite ($COMPX) fell 45 points, or 1.6%, to close at 2,737.

Federal Reserve Chairman Ben Bernanke in a semi-annual report to Congress warned that sustained high oil prices could dent the recovery -- but that was hardly news to traders who were already discounting such risks. The Dow, after all, lost 2.1% last week. If there was any pattern to Tuesday's action it was that oil prices resumed their upward trend after stabilizing over the prior two sessions -- and that, in turn, spooked equity investors.

Benchmark crude oil futures traded on the Comex division of the New York Mercantile Exchange (CME) rose $2.66, or 2.7%, to settle at $99.63 a barrel -- their highest closing level since September 2008.

Not All News Was Bad

In addition to fueling higher oil prices, turmoil in Libya has added to geopolitical uncertainty, which has led to a rebound in gold prices. Gold traded on the Comex rose $21.30, or 1.5%, to settle at $1,431 an ounce -- a new record when not adjusted for inflation.

The sharp rise in oil prices overshadowed some encouraging corporate and economic news. General Motors (GM) racked up another impressive month of sales in February, as consumers snapped up new GM models despite soaring prices for gasoline. The Detroit-based automaker reported Tuesday that year-over year sales in February rose 46% for a total 207,028, exceeding analyst estimates, as well as GM's own expectations.

Rival Ford Motor (F) reported Tuesday that its February sales rose 14% compared to a year ago, in part due to strong sales of the revamped Ford Explorer sports-utility vehicle, which debuted in late 2010. In all, auto sales in February ran at the strongest annual pace since the federal "cash-for-clunkers" program.

In economic news, activity at U.S. manufacturers expanded last month at its fastest pace in seven years. The Institute for Supply Management said its manufacturing index rose to 61.4 from 60.8 the prior month. The gauge easily beat economists' average outlook, which stood at 60.5 for February. Alas, autos and manufacturers could stop the bleeding among stocks inflicted by oil.

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May 29 2011 at 1:00 AM Report abuse rate up rate down Reply

Hey, go gold go only way we are going to be to pay for these gas prices. Glad we invested in gold!!!

March 02 2011 at 4:05 PM Report abuse rate up rate down Reply

Not to worry...The Bernanke says all is well. Nothing to see here folks. Move along.

March 02 2011 at 2:14 AM Report abuse rate up rate down Reply

The little guy should invest in silver, its cheaper than gold and you can buy more of it for $ 1,425.00 , and it will go up the same % that gold will. The people that are on this site are probably average income people like me, so gold will be out of the question, so buy silver it will have a good pay out. D0n,t foreget to buy those 90% silver coins, they will be a good return in a year.

March 01 2011 at 11:46 PM Report abuse +1 rate up rate down Reply

You might want to pick up some silver right about now while it is still affordable , expect 1500 gold by the end of next month! As for the USD ...R.I.P

March 01 2011 at 11:15 PM Report abuse rate up rate down Reply

Let's start charging the countries out their for our miltary protection that would be a good way to bring down our defeict , especially charging the Middle Eastern Countries for protection we give them , Phone# for the White House comment Line open 9 am to 5 pm Mlonday thru Friday 202-456-1111 , call and comment

March 01 2011 at 11:14 PM Report abuse +3 rate up rate down Reply

Our President is so out of touch with the American public He truly is a one term person thank God , he just think's turning on the money printing press with out industry to back up the money supply and to give it out with out making people work for benfit's is Ok is totally wrong , We still have no idea if he was Born in the USA and thus is entitled to be our President . I bet this doesn't get published

March 01 2011 at 11:09 PM Report abuse -1 rate up rate down Reply

Its funny ....I'm not seeing any Bullsh*t story from Joe Lazzaro today about how things have never been better and the great economic recovery ! Did they finally give that sorry excuse of a propaganda journalist the boot?

March 01 2011 at 11:02 PM Report abuse +1 rate up rate down Reply

What's next the price of tomato soup and crackers...give me a break...brokers and traders...same old same old...wall street is still on the take...same people just different faces.....

March 01 2011 at 8:42 PM Report abuse +4 rate up rate down Reply

as obama sits in the whitehouse totally ignorant of what is happening to the united states middle class being totally crushed by the increasing price of oil, lets open up all of america to drilling, and oil exploration for united states consumption only, let the countries overseas worry about themselves. and lets finally take care of our people, and the hell with these so called envoirmentalists. send them back to california

March 01 2011 at 8:19 PM Report abuse +5 rate up rate down Reply
1 reply to hduplease's comment

screw that... we have enough fuits and nuts here in keep 'em

March 01 2011 at 9:11 PM Report abuse rate up rate down Reply