Focus Turns to Fed, Oil Prices

Stocks spent Monday on the defensive on fears of higher oil prices and interest rates.

Oil prices spiked 7% as another tropical storm headed for the Gulf of Mexico, and a pivotal Federal Reserve meeting on Tuesday had traders wondering whether the Fed will halt its 15-month rate hike campaign in the wake of Hurricane Katrina.

Despite hopes for a break from the Fed until the impact of Katrina becomes clear, Fed funds futures traders on Monday priced in yet another interest rate hike for Tuesday, raising the likelihood that short-term interest rates will continue to head higher.

The Nasdaq fell 15 to 2145, the S&P slipped 6 to 1231, and the Dow fell 84 to 10,557. Volume fell to 2.07 billion shares on the NYSE, and 1.61 billion on the Nasdaq. Decliners led 22-10 on the NYSE, and 20-10 on the Nasdaq. Downside volume was 68% on the NYSE, and 71% on the Nasdaq. New highs-new lows were 290-104 on the NYSE, and 220-106 on the Nasdaq.

HP rose 2% on a pair of acquisitions.

Apollo fell 5% on a warning.

Overstock tumbled 7% on a technology glitch that caused sales to plummet.

News Around the Web