Stocks Plunge on Stagflation Fears
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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).
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.