US stocks slid on Tuesday after oil prices jumped above $129 a barrel and a key inflation gauge rose more than expected, adding to concerns that Americans will have less to spend. Slack quarterly earnings from two of the biggest US retailers, Target Corp and Home Depot Inc, underscored how consumers are struggling as gasoline prices soar and home values drop.
Bank shares were the biggest drags on the S&P 500 and the Dow after an influential analyst warned that the credit crisis was far from over. J.P. Morgan Chase & Co fell almost 5 percent. An index of S&P financials closed at its lowest level in a month.
The tone was set early in the session, after the US Producer Price Index, excluding volatile food and energy costs, rose at the fastest since 1991 for the year through April. "The pullback on some concerns about inflation and higher oil is not all that surprising after last week's gains," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research in Cincinnati.
But as in last week's rally, volume was also thin on the way down. The Dow Jones industrial average fell 199.48 points, to 1.53 percent, to 12,828.68. The Standard & Poor's 500 Index slid 13.23 points, or 0.93 percent, at 1,413.40, while the Nasdaq Composite Index ended down 23.83 points, or 0.95 percent, to 2,492.26.
Meredith Whitney, banking analyst at Oppenheimer & Co, said the credit crisis will result in three years of multibillion-dollar revenue declines for banks. J.P. Morgan, the No 3 US bank, dropped 4.9 percent to $43.73, while shares of Citigroup Inc, the largest US bank, declined 3.8 percent to $22.11.
Technology shares also took a heavy beating. Chip maker Intel Corp was down more than 3 percent a day after data-storage memory chip maker SanDisk Corp warned higher oil prices will hurt consumer spending on technology. Intel dropped 3.2 percent to $24.09, putting the stock among the top drags. SanDisk shares tumbled 3.4 percent to $29.01.
Shares of Home Depot, the largest US home improvement chain, fell 5.2 percent to $27.37 after the retailer posted a 66 percent slide in quarterly profit. Target fell 1.1 percent to $54.29 after it said its sales growth will likely remain sluggish until the US economic environment improves or stabilises.
The only two companies escaping the sell-off on the Dow industrials were Chevron Corp and Exxon Mobil, which benefited from the latest record high in oil prices. Exxon closed 0.2 percent higher at 94.56 and Chevron rose 0.9 percent to $103.09.
Trading volume was low on the New York Stock Exchange, with about 1.2 billion shares changing hands, below last year's estimated daily average of roughly 1.9 billion, while on Nasdaq, about 2 billion shares traded, also short of last year's daily average of 2.17 billion. Declining stocks outnumbered advancing ones on the NYSE by 2 to 1 and by about 3 to 2 on the Nasdaq.