Wall Street dips on interest rates and inflation jitters

Stocks fell moderately Wednesday after the government sold $19 billion in 10-year Treasury notes in a relatively weak auction. There were plenty of bidders, but the government had to lure them in with a higher yield than the market had anticipated. The yield on the benchmark 10-year Treasury note rose for the fourth time in five days, jumping to 3.96 percent from 3.86 percent late Tuesday. Investors are worried rising interest rates will crimp the economy's recovery.

Wall Street lost ground Wednesday as investors mulled the impact of a rising commodity prices and higher bond yields that could crimp an economic rebound.

The Dow Jones Industrial Average dropped 24.04 points (0.27 percent) to close at 8,739.02 after an up-and-down session.
The Nasdaq composite fell 7.05 points (0.38 percent) to 1,853.08 while the Standard & Poor's 500 broad-market index shed 3.28 points (0.35 percent) to 939.15.

Analysts said Wall Street took a cue at the opening from overseas markets, after upbeat comments about the Chinese economy that fueled gains in commodities. In the US, key home improvement retailer Home Depot's increased guidance boosted hopes that housing and the overall economy were improving.

OIL GUSHES TO 2009 HIGH $71.80

But much of the focus was on commodities, including oil prices, which closed at eight-month highs above $71 a barrel in New York.
Although some traders viewed the rise in commodities as a sign the global economy was emerging from its slump, others said this could put the brakes on a recovery.

"Rising oil prices essentially act as a direct, broad-based tax that impedes consumer spending on other items," said Fred Dickson at DA Davidson & Co.

Oil prices eclipsed the prior session's 2009 closing high by finishing 1.7% higher at $71.14 per barrel. Crude prices also registered new intraday highs for 2009 by climbing to almost $71.80 per barrel shortly after weekly oil inventories showed a surprise draw.

"Most investors appear to be anticipating the recession bottoming out this summer and a quick economic rebound in the fourth quarter. Rising oil prices are one force that could lengthen the recession and add a growing dimension of pain to many American families. If oil prices suddenly race up to 100 dollars a barrel, a sustainable consumer led economic recovery would be difficult to achieve."

Daily

The Dow Jones industrial average fell 24.04, or 0.3 percent, to 8,739.02.
The Standard & Poor's 500 index fell 3.28, or 0.4 percent, to 939.15.
The Nasdaq composite index fell 7.05, or 0.4 percent, to 1,853.08.
For the week:
The Dow is down 24.11, or 0.3 percent.
The S&P is down 0.94, or 0.1 percent.
The Nasdaq is up 3.66, or 0.2 percent.
For the year:
The Dow is down 37.37, or 0.4 percent.
The S&P is up 35.90, or 4 percent.
The Nasdaq is up 276.05, or 17.5 percent.