Stocks tumbled for a second day Wednesday after another record high in oil prices and Federal Reserve meeting minutes raised the specter of stagflation: a stagnant economy and rising inflation.
Crude prices spiked more than $5 to $134 a barrel, and the Fed said it is done cutting interest rates unless the economy slows considerably — even as the Fed predicted slower growth and rising prices.
The result was the worst two-day loss for stocks in three months, as investors and consumers continue to struggle with a credit market-fueled slowdown and rising inflation.
HP (NYSE: HPQ) lost 3.6% despite strong quarterly results, as investors focused on flat desktop sales and fretted about the company's pending merger with EDS (NYSE: EDS). ABS-CBN News Online (Beta)::
and oil surged above $135 a barrel, re-kindling fears of 1980s-style stagflation. from Mays stock market rally and saddled US stocks with their worst
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Analog Devices (NYSE: ADI) fell 4% on its earnings report, and Apple (NASDAQ: AAPL) and Research in Motion (NASDAQ: RIMM) shed 4% each.
Intuit (NASDAQ: INTU) was a rare bright spot, rising 3.4% on its results. Qualcomm (NASDAQ: QCOM) and Compuware (NASDAQ: CPWR) were other Nasdaq most actives that escaped the selling.
The Nasdaq fell 43 to 2448, the S&P lost 22 to 1390, and the Dow tumbled 227 to 12,601. Volume rose to 4.49 billion shares on the NYSE, and 2.21 billion on the Nasdaq. Decliners led by a 22-9 margin on the NYSE, and 19-9 on the Nasdaq. Downside volume was 82% on the NYSE, and 83% on the Nasdaq. New highs-new lows were 130-81 on the NYSE, and 74-135 on the Nasdaq.
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