US stocks fell on Wednesday, wiping out earlier gains, after oil hit a new all-time high, raising fears that consumer spending and corporate earnings will be hurt later in the year. Shares in industrial and cyclical companies dropped as a government report showed a bigger-than-expected decline in US durable goods orders in July.
Caterpillar Inc, the world's largest maker of earth-moving equipment, fell 2.7 percent to $53.21, making it the biggest decliner in the blue chip Dow average.
United Technologies Corp dropped 1.5 percent to $50.74 and also dragged on the Dow. The Dow Jones industrial average slid 84.71 points, or 0.81 percent, to end at 10,434.87. The Standard & Poor's 500 index dropped 8.00 points, or 0.66 percent, to finish at 1,209.59. The technology-laced Nasdaq Composite Index shed 8.34 points, or 0.39 percent, to close at 2,128.91.
"Oil remains one of the biggest themes weighing on the stock markets," said Bill Strazzullo, chief market strategist at State Street Global Markets in Boston. "It puts a cap in any stock-index appreciation. The concern is that companies won't be able to keep avoiding price increases if oil continues this high for an extended period of time."
US crude oil futures for October delivery rose $1.61 to settle at a record $67.32 a barrel on the New York Mercantile Exchange, after climbing to a 22-year high of $67.40.
The price jump followed government data showing US gasoline supplies fell more than expected last week.
Energy shares got another boost after Morgan Stanley lifted its 2005 earnings estimates on five major energy companies. ConocoPhillips rose 0.9 percent, or 54 cents, to $63.2, and Sunoco Inc climbed 2.4 percent, or $1.47, to $63.85, both on the NYSE.
When oil hit $67 a barrel in afternoon trading, the major stock indexes gave up their gains.
Earlier, stocks had climbed after a report showed new US home sales surged unexpectedly in July to a record high in a positive sign of economic growth. Sales of new homes rose 6.5 percent to a seasonally adjusted annual rate of 1.41 million units, in contrast to analysts' estimates for a drop in sales to a pace of 1.33 million units.
Shares of D.R. Horton Inc, the No 1 US home builder, rose 1 percent, or 39 cents, to $35.31, while Pulte Homes Inc, the No 2 US home builder, gained 1.6 percent, or $1.36, to $84.84. Centex Corp shot up 0.9 percent, or 56 cents, to $66.16 and Beazer Homes USA Inc gained 2.6 percent, or $1.56, to $60.98.
The pleasant surprise of a jump in new home sales helped the stock market recover from the weaker-than-expected durable goods report, released before the opening bell. Orders for US durable goods tumbled 4.9 percent in July, the biggest drop since January 2004, as demand for most manufactured items fell, the government said.
Among the Dow's advancing stocks, General Motors Corp, the world's largest automaker, rose after a Wall Street Journal article reported that the United Auto Workers union said it is considering helping the carmaker to cut costs. Shares of GM rose 2.2 percent, or 75 cents, to $34.27 on the NYSE. On Nasdaq, shares of Google Inc, the largest Web search engine, rose 1.1 percent, or $2.99, to $282.57 after the company said it would introduce its own instant messaging system.
Trading was active on the New York Stock Exchange, where decliners beat advancers by a ratio of about 5 to 4, with about 1.45 billion shares changing hands, close to the 1.46 billion daily average for last year.
On Nasdaq, decliners also outnumbered advancers by a ratio of about 5 to 4, with about 1.76 billion shares changing hands, below the 1.81 billion daily average last year.
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