NEW YORK - Stocks tumbled Tuesday as a troubling reading on wholesale inflation underscored the drag of high energy prices on the economy. Investors, again growing anxious about banks' credit woes, sent the Dow Jones industrial average down more than 100 points.
Stocks fall on inflation, banking fears
June 18, 2008 at 1:41AM
The economic data illustrated how the steep run-up in energy costs this year is affecting businesses. The Labor Department said its index of producer prices jumped 1.4 percent in May -- the largest increase since November.
The core producer price index, which strips out often-volatile food and energy prices, rose by a mild 0.2 percent. But Wall Street remains concerned that companies are having to swallow ballooning costs -- and may soon be forced to pass them on to already strapped customers. Although crude dipped to about $134 a barrel Tuesday on the New York Mercantile Exchange, the price remains near record levels.
Meanwhile, Goldman Sachs -- despite posting a tamer-than-expected 11 percent decline in quarterly profit -- aggravated jitters by releasing a downbeat report on the broader banking industry. The report estimated that credit losses from deterioration in the mortgage and lending markets will not peak until early 2009, and that U.S. banks, having already raised about $120 billion in capital, will need to raise an additional $65 billion.
The worst-performing stocks among the 30 Dow companies were financial companies: American International Group Inc., American Express Co. and Bank of America Corp.
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The medtech company with roughly 10,000 Minnesota employees reported annual revenue exceeding $16 billion.
