After Market: War in Iraq Has U.S. Investors Running for Cover

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The new surge of fighting in Iraq further roiled U.S. markets Thursday, and sent airline stocks into a tailspin. The price of light sweet crude oil jumped by $2.53 a barrel to $106.93 as the Sunni militant group ISIS captured several key cities, raising worries about Iraqi oil production.

The Dow Jones industrial average (^DJI) fell 109 points -- its second straight triple digit loss -- the Nasdaq composite (^IXIC) dropped 34, and the Standard & Poor's 500 index (^GPSC) lost 13 points.

Airline stocks had benefited from relatively stable oil prices over the past year, and rising prices could hurt earnings. United-Continental (UAL) slid 6½ percent, American Airlines (AAL) and Delta (DAL) lost 5 percent and Southwest (LUV) fell 4½ percent. Even with that drop, Southwest shares are still up 85 percent from a year ago.

On the other side of the oil ledger, some drilling companies rallied. Noble (NBL) and Transocean (RIG) both rose 3 percent and Diamond Offshore (DO) gained nearly 4 percent.

Some of the big global oil companies also gained. Chevron (CVX), BP (BP), Royal Dutch (RDS) and Conoco Phillips (COP) all rose about 1 percent, but Exxon (XOM) was little changed.

Lululemon (LULU) was one of the day's big losers, tumbling 16 percent after reporting sharply lower earnings and reducing its guidance for the year.

But Restoration Hardware (RH) jumped 13 percent as net and sales at the home furnishings retailer both topped expectations.

And Lands' End (LE) rose 8½ percent as earnings rose in its first quarterly report since being spun off from Sears (SHLD). Despite today's gain, Lands' End is off about 14 percent since it began trading independently.

Amazon (AMZN) fell 2½ percent after launching a music streaming operation linked to its Prime delivery service.
Also in the Internet and social media arena, Facebook (FB) and Netflix (NFLX) both fell about 2 percent, and Google (GOOG) lost more than 1 percent. But Twitter (TWTR) gained 3½ percent on a report it may shake up its roster of top executives.

Finally, a pair of low-priced biotechs rallied. Geron (GERN) jumped 21 percent after the FDA lifted a hold on clinical trials of its drug to treat myelofibrosis.

And Zalicus (ZLCS) soared 39 percent on positive test results for its rheumatoid arthritis treatment.

What to Watch Friday:
  • The Labor Department releases the Producer Price Index for May at 8:30 a.m. Eastern time.
  • The University of Michigan releases its initial survey of Consumer Sentiment for June at 9:55 a.m.
-Produced by Drew Trachtenberg.


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22 Comments

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jpark377

I don't seem to understand how fighting in Iraq would affect crude flowing through the Keystone XL pipeline? Hey- Obama: MAYBE THAT'S THE POINT OF BUILDING KEYSTONE XL IN THE FIRST PLACE! Why your Democrat party wants us to buy our oil from unstable Middle Eastern countries and Muslim Sharia-observing oil sheiks is beyond me. Give the people in Canada, North Dakota and the American consumer in general a chance: build the Keystone XL Pipeline ASAP!

June 12 2014 at 11:16 PM Report abuse -1 rate up rate down Reply
2 replies to jpark377's comment
teaparty2implode

All of the oil from the Keystone pipeline will be exported.

June 12 2014 at 11:36 PM Report abuse -1 rate up rate down Reply
1 reply to teaparty2implode's comment
mrsperlosi

And you know that how dear? Did you read the help wanted ads today darling?

June 13 2014 at 1:29 AM Report abuse -1 rate up rate down
ajschrod

We would not gain one barrel of oil from the pipeline. 100% of it is for China. HOW COME YOU DON'T KNOW THAT???

June 12 2014 at 11:59 PM Report abuse +1 rate up rate down Reply
supermolar

run for cover? Why? war is good for business!

June 12 2014 at 11:08 PM Report abuse +1 rate up rate down Reply
YourFtr

The Libeals were too busy busing kids to the US border; to pay attention to world affairs.......

June 12 2014 at 10:38 PM Report abuse +1 rate up rate down Reply
YourFtr

Market Crashes as Obama 'Forgets' about Iraq.......Terrorists ready to storm Baghdad.......
Syrian civil war spreads to Iraq......

June 12 2014 at 10:32 PM Report abuse rate up rate down Reply
oldmandowntown2

Anytime we get involved in a conflict or war, guess who makes out the most. If you guessed Halliburton, your 100% correct. Can you also guess which party Halliburton supports and makes huge campaign donations too. If you guessed the Republican (GOP) party, your right again. The Iraq war was all over stealing Iraq's oil reserves, planned long before 911. Those involved in the planning was Bush, Chaney, Rumsfeld, Halliburton and Exon. They should all be tried to conspiracy, fraud, treason and war crimes, and suffer the harshest punishment possible. Now if the truth was really known Halliburton, Exon and BP are behind Iraq requesting help from us.

June 12 2014 at 9:42 PM Report abuse +1 rate up rate down Reply
2 replies to oldmandowntown2's comment
jpark377

Barry has been in office for almost 6 years. I know you're not happy with him, otherwise your ilk would stop bringing-up Hillary every two seconds when Barry has over 2 more years to serve. That being said, Bush and Cheney are ancient history: the Middle Eastern instability of today is Obama's problem; and if he could send Solyndra over there to profit instead of Haliburton, I know he would!

June 12 2014 at 11:23 PM Report abuse +1 rate up rate down Reply
mrsperlosi

Oh baloney you and Rosie O'Donnell must have been comparing notes. How unfortunate for you that you wander through life in a state of confusion dear.

June 13 2014 at 1:33 AM Report abuse +1 rate up rate down Reply
drmike15

Wow, this bears no resemblance to the 1972 Easter Offensive. Nope, none at all. See you at the helicopter pad in Saigon . . .

June 12 2014 at 9:34 PM Report abuse +1 rate up rate down Reply
Straightdeck

The U.S. deposed Saddam Hussein and the Sunnis. The Sunnis were replaced by a Shia administration friendly to Iran. Now the warrior Sunnis are coming back and we and the Iranians are on the same side. The proponents of aerial intervention know it can easily turn into U.S. boots-on-the-ground, which would greatly please the NeoCons who helped deceive us into deposing Saddam with the "weapons of mass destruction ruse." My view is that Sen. McCain is the NeoCons public face. Watch his actions to understand the game. He will promote military intervention.

June 12 2014 at 9:33 PM Report abuse +1 rate up rate down Reply
savannahswithgod

Invest in a World War, sound advice.

June 12 2014 at 9:24 PM Report abuse +1 rate up rate down Reply
elendil3136

A civil war in Iraq was inevitable. The country is too fragmented for any other outcome to be possible. In their system, minority rights are almost unheard of. The group in charge makes the rules, and that's it. The minorities either put up with it, or start a civil war. Once we were gone, there was no way the people NOT in charge were going to meekly submit without making the group that IS in charge prove they could hold on to power by force. Some of us tried to point this out before we went in, and we were called unpatriotic for our trouble. Don't bother apologizing now. The time for that was 2008.

June 12 2014 at 9:24 PM Report abuse +1 rate up rate down Reply
efat53yz

everytime Obama puts restrictions on russia,,, or he watches whats going i Iraq and stumbles on his decisions,, only people that hurt,, are us americans,,, the gas prices soar,,, go figure,,our commander in chief,,, is more like an idiot that cant make a smart decision,,,

June 12 2014 at 8:12 PM Report abuse rate up rate down Reply