Stocks sank deeper into the red in late trading Wednesday, as a decline in financial stocks more than offset a boost in oil prices and energy stocks.
The Dow Jones Industrial Average lost 48 points, or 0.5%, to 10807, while the Standard & Poor’s 500-stock index shed six points to 1142 and the Nasdaq Composite dropped eight points to 2371.
Speculation that the Federal Reserve will take further steps to spur the economy has pushed the dollar lower in recent days. The U.S. Dollar Index, which measures the greenback against a basket of six currencies, hit its lowest level in eight months Wednesday.
Investors remained focused on any possible Fed action, as a small handful of Fed officials delivered speeches throughout the day. Gold futures hit another high as the dollar continued its slide, with the yellow metal settling at $1,308.50 an ounce.
The Dow mounted a mid-day rally after the Department of Energy said crude-oil stockpiles fell by 475,000 barrels to 357.9 million barrels, more than an expected 300,000-barrel decline.
The steep drop, which follows a summer of unusually high levels of stockpiling, helped oil prices jump briefly over $78 a barrel after falling as low as $75.60 a barrel earlier in the morning.
Energy stocks benefited from oil’s climb, as Sunoco rose 3.7%, Hess gained 1.7% and Chevron added 0.6%. Exxon Mobil remained lower, off 0.6%, while BP rose 1.7% after incoming Chief Executive Officer Bob Dudley said he would restructure BP’s upstream business and create a new safety division, with the power to audit any part of the company’ operations.
But rising crude prices weighed on consumer-discretionary stocks. Urban Outfitters dropped 7.4% and Starwood Hotels & Resorts shed 2.8%.
“For consumers, this is a huge part of their pocketbook,” said Thomas Villalta, portfolio manager at Jones Villalta Asset Management in Austin, Texas, referring to rising oil prices.
The financial sector was the biggest drag on the market, as the government made steps towards exiting its investments in Citigroup and American International Group, made during the height of the financial crisis. Shares of Citigroup and AIG pared strong intraday gains to advance 0.3% and 0.5% respectively. J.P. Morgan Chase lost 2% and Bank of America shed 1.6%.
The dollar sank to 83.66 yen, its lowest level since Japanese authorities intervened in currency markets two weeks ago. The euro edged up against the dollar, piercing the $1.36 barrier after the European Commission proposed legislation that would strengthen its control over the economic policies of EU member states, including fines for breaching budget rules.
Treasurys were modestly lower, with the yield on the benchmark 10-year note creeping back above the 2.50% market, at 2.51%.
Technology stocks inched upwards, helped by a 2.1% gain at Hewlett-Packard after the company said revenue for the fiscal year would be between $131.5 billion and $133.5 billion, a range that compared favorably with the consensus forecast of $131.6 billion.
Shares of Green Mountain Coffee Roasters fell 16% after the firm said the Securities and Exchange Commission was investigating its revenue-recognition practices.
Family Dollar Stores rose 2.3% after the discounter topped the consensus earnings forecast and announced plans to buy back up to $750 million of its shares.
Nintendo dropped 8.7% after the Japanese gaming company cut its profit and sales outlook, citing the strong yen and weaker-than-expected sales of its video-game consoles.