Stocks fell sharply and oil prices spiked to their highest level in two years Tuesday as unrest in Libya worsened.
Oil prices jumped 6% percent to $95 a barrel. The fight between protesters and forces loyal to the Libyan leader Mummar Gaddafi threatens oil production from the world’s 15th largest oil exporter, accounting for 2% of global daily output. Libya also sits atop the largest oil reserves in Africa.
The Dow Jones industrial average sank 178.46 points, or 1.4%, to close at 12,212.79. Bond prices rose as investors sought safety.
Libyan leader Muammar Gaddafi vowed to fight to his “last drop of blood” and roared at his supporters to take to the streets against protesters demanding his ouster.
The Standard&Poor’s 500 index fell 27.57, or 2%, to 1,315.44. It was the worst day for the S&P since August 11.
The Nasdaq fell 77.53, or 2.7%, to 2,756.42.
Among traders, the main worry is that unrest will spread to other oil-rich countries in the Middle East and North Africa. Protests toppled long-time dictators in Libya’s neighbours Tunisia and Egypt in the past month, and protests are continuing in Yemen and Bahrain.
Falling stocks outnumbered rising ones nine to one on the New York Stock Exchange. Volume was 1.3 billion shares.
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