Energy Fears Hit Stocks

Surging energy prices helped send major stock indexes lower Thursday, driving the Dow Jones industrial average back into the red for the year.

Wall Street was rattled as crude oil prices rose above $60 a barrel and as natural gas reached a record high, reviving concern that fuel costs may curtail consumer spending.

In other trading, gold extended its rally, driving the metal’s price to a 24-year high, nearing $520 an ounce.

The Dow slid 55.79 points, or 0.5%, to 10,755.12, its fourth loss in five sessions. The index is down 0.3% year to date, not counting dividend income.

The broader market wasn’t hit as hard. The Standard & Poor’s 500 eased 1.53 points, or 0.1%, to 1,255.84. And rising stocks outnumbered losers by modest margins on the New York Stock Exchange and on Nasdaq.

The technology-heavy Nasdaq composite index slipped 5.55 points, or 0.3%, to 2,246.46.

Still, some analysts are worried that the market has lost its fourth-quarter momentum.

“We’ve pretty much capped out our gains,” said Art Hogan, chief market analyst at Jefferies & Co. in Boston. “I don’t think there’s enough of a positive catalyst in the next three weeks to sustain” the recent rally, he said.

Oil and natural gas prices fell in November, boosting Wall Street. But energy costs have resurged over the last two weeks.

On Thursday, colder weather in the East drove expectations for greater heating fuel demand. Near-term natural gas futures in New York soared $1.29, or 9.5%, to a record $14.99 per million British thermal units.

Crude oil futures rose $1.45 to $60.66 a barrel, the highest closing price since Nov. 3.

“We had a warm start to the winter, but now it is starting to look a bit ugly. The focus will be on cold weather for some time to come,” said Craig Pennington, global energy portfolio manager at investment firm Schroders.

The stock market may have taken some comfort Thursday in lower bond yields. The 10-year Treasury note slid to 4.46% from 4.51% on Wednesday. The decline occurred despite a relatively disappointing sale of new 10-year T-notes at a yield of 4.49%.

Although Federal Reserve policymakers are expected to raise their key short-term rate from 4% to 4.25% on Tuesday, some investors are betting that the central bank will change the language in its post-meeting statement to signal that it is nearing the end of its credit-tightening cycle.

“People believe the Fed statement is going to be dovish ... and as a result are trying to position for that,” said Lundy Wright, a bond trader at Nomura Securities International in New York.

In commodities trading Thursday, near-term gold futures jumped $5 to $519.30 an ounce, a 24-year high and the eighth gain in nine sessions as investors and traders continued to pile into the metal.

Among the day’s highlights:

* Energy stocks staged the largest rally in the S&P; 500, rising 1.5% on average. Todco jumped $2.43 to $44.68, Noble Energy gained $1.11 to $42.65 and Apache was up $1.71 to $70.98.

* General Motors paced the Dow’s decline, falling $1.04 to $22. The troubled automaker, which plans to cut 30,000 jobs and shut 12 plants by 2008, on Wednesday said it was in talks to appoint a representative of billionaire Kirk Kerkorian as a director, a move analysts say could lead to drastic restructuring actions.

* McDonald’s, another Dow stock, said its worldwide same-store sales grew 4% in November, below estimates. The shares fell 44 cents to $34.82.

* Chip stocks led the tech sector lower, ahead of Intel’s business update. The company said after the close of regular trading that it expected fourth-quarter sales in the range of $10.4 billion to $10.6 billion, in the middle of the range it previously projected.

The stock, down 45 cents to $25.70 in regular trading, fell to $24.93 after hours. It has dropped from $27.43 a week ago.

* Among home builders, Toll Bros. jumped $1.25 to $35.55 despite its warning of slower growth in 2006. The stock already has tumbled from a peak of $58 in July.

KB Home gained 75 cents to $69.02. It announced near the end of trading that it would increase its annual cash dividend from 75 cents to $1 a share. At Thursday’s market price, the stock’s annualized dividend yield is 1.4% based on the new payout.

* Costco Wholesale said a modest rise in sales helped lift its quarterly profit 12% to match Wall Street forecasts. The stock sank $1.06 to $48.29.

* Restaurant chain Dave & Buster’s fell 7 cents to $15.21. But after the market closed, the company said it agreed to be bought by an investment firm for $18.05 a share in cash.

* Gold mining shares rallied with the metal. Barrick Gold gained 39 cents to $28.20, GoldCorp jumped 61 cents to $21.30 and Glamis Gold was up 34 cents to $25.38.

* In foreign trading, Tokyo’s Nikkei 225 index continued to pull back from its recent five-year high, losing 2% to 15,183.36.