8:02 am - Stocks fall as oil prices stir economic worries

NEW YORK (AP) - Wall Street ended a week of big losses with more sellingFriday as rising oil prices again raised worries that strained consumers willcut back spending and hurt the overall economy. The Dow Jones industrials fellnearly 150 points in the final session before the three-day holiday weekend. Investors are uneasy about consumers, who at the start of Memorial Dayweekend are paying gasoline prices that have gone up nearly 20 percent, or 65cents a gallon, in the past year. Wall Street's fear is that consumers, who account for more than two-thirdsof U.S. economic activity, will pare spending to make room in their budgets forgas that has topped $4 a gallon in some parts of the country. Light, sweet crude rose $1.38 to settle at $132.19 per barrel on the NewYork Mercantile Exchange. Oil saw its third weekly gain after surging to arecord $135.09 a barrel on Thursday. Some investors are buying on the beliefthat global demand from countries like China and India will outstrip supply. Aweak dollar also makes each barrel more expensive. "Crude oil is still weighing on the market and particularly because this isa traditional driving holiday," said Chris Orndorff, director of equity strategyat Payden & Rygel in Los Angeles. The concerns sent Dow down 145.99, or 1.16 percent, to 12,479.63. Broader stock indicators also declined. The Standard & Poor's 500 index fell18.42, or 1.32 percent, to 1,375.93, and the Nasdaq composite index slid 19.91,or 0.81 percent, to 2,444.67. For the week, the Dow lost 3.91 percent, suffering its worst week sinceFebruary, while the S&P 500 gave up 3.47 percent and the Nasdaq fell 3.33percent. The economic fallout from higher energy prices commanded Wall Street's focusduring the week. Stocks managed to post gains Thursday following the Dow'sbiggest two-day loss since late February. Despite the declines in the majorindexes for the week, stocks are off their mid-March lows. The Dow is still up6.3 percent from its close of 11,740.15 on March 10, when credit concernsweighed on the market. "I think while the eye of the credit storm may have passed, the tidewater isstill rising on the consumer and investors can't lose sight of that," said JackAblin, chief investment officer at Harris Private Bank in Chicago. He noted thathigher gas prices had led some vacationers to reduce how far they plan to travelfor the holiday. "It is taking a toll on the consumer and it remains to be seen how that willimpact corporate earnings." Beyond consumers, investors worried about the harm higher energy prices arehaving on businesses. The rise in oil hammered sectors such as airlines.Continental Airlines Inc. fell nearly 27 percent for the week, while UnitedAirlines parent UAL Corp. dropped nearly 46 percent. Bond prices rose Friday as investors sought the safety of government debt.The yield on the benchmark 10-year Treasury note, which moves opposite itsprice, fell to 3.85 percent from 3.92 percent late Thursday. The dollar fell, while gold prices rose. Orndorff said the spike in oil has rekindled concerns about stagflation --when stalling growth accompanies rising prices. "Given that inflation remains stubbornly high, then the Fed is going to beless accommodative going forward so we may end up a period of sluggish growth instubbornly higher inflation," he said, referring to possible interest rate cutsfrom the Federal Reserve. Minutes released this week from the last meeting ofthe central bank's rate-setting arm doused some investors' hopes thatpolicymakers will again cut rates to aid the economy when they meet at the endof June. Orndorff predicts investors will need further evidence on how the economy isfaring before they resume taking stocks back toward the highs seen last fall. "I think the market for the most part is going to be in a somewhat narrowtrading range until you get the earnings that come out in July. I think that'sgoing to be an important quarter as people see how the effects of the globaleconomy slowing are affecting the companies." A Financial Times report that brewing company InBev is readying a $46billion takeover bid for Budweiser maker Anheuser-Busch Cos. failed to shakeWall Street from its downcast mood. Often, buyout activity is fodder for a rallyin stocks as it as seen as a bullish sign for the economy. But the buyingappeared limited to the St. Louis brewer, whose shares hit an all-time high.Anheuser-Busch rose finished up $4.03, or 7.7 percent, to $56.61 after tradingas high as $58. American Axle and Manufacturing Holdings Inc. fell 81 cents, or 4.2 percent,to $18.44 after the company said that workers approved a contract including paycuts and other concessions. The vote ends a strike that lasted nearly threemonths, hurting General Motors Corp.'s production of large sport utilityvehicles and pickups. Although the contract's ratification will benefit GM, autostocks saw pressure during the week because of soaring fuel prices. GM was thesteepest decliner among the 30 stocks that comprise the Dow industrials, falling83 cents, or 4.5 percent, to $17.60. Declining issues outnumbered advancers by about 7 to 3 on the New York StockExchange, where consolidated volume came to 3.43 billion shares compared with3.85 billion shares traded Thursday. The Russell 2000 index of smaller companies fell 8.91, or 1.22 percent, to724.10. In overseas trade, Tokyo's Nikkei closed rose 0.24 percent. In Europe,London's FTSE ended down 1.53 percent, Frankfurt's DAX fell 1.79 percent andParis' CAC 40 shed 1.89 percent. The Dow Jones industrial average ended the week down 507.17, or 3.91percent, at 12,479.63. The Standard & Poor's 500 index finished down 49.42, or3.47 percent, at 1,375.93. The Nasdaq composite index ended the week down 84.18,or 3.33 percent, at 2,444.67. The Russell 2000 index finished the week down 17.07, or 2.3 percent, at724.10. The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted indexthat measures 5,000 U.S. based companies -- ended Friday at 13,954.47, down469.28 points, or 3.25 percent, for the week. A year ago, the index was at15,348.10. Copyright 2008 Associated Press. All rights reserved. This material may not be