Stocks have dropped after another spike in oil prices overshadowed a report that the US unemployment rate fell to its lowest level in nearly two years.
Crude oil rose 2.5% to more than 104 dollars (£64) a barrel, its highest level since September 2008, after fighting in Libya escalated.
Markets have been rattled over the past two weeks as higher oil prices threaten to undermine the economic recovery by increasing transportation and production costs.
Higher energy prices sent stocks lower despite news that the US job market is improving. The Labour Department reported that unemployment rate dipped to 8.9% in February from 9% the previous month.
The rate has dropped for three months in a row and is now at its lowest level since April 2009. Employers added 192,000 jobs in February, the fastest increase in almost a year.
The Dow Jones industrial average dropped 88.32 points, or 0.7%, to 12,169.88. The Dow had been down as many as 178 points earlier. The Standard & Poor’s 500 index fell 9.82, or 0.7%, to 1,321.15. The Nasdaq composite index fell 14.07, or 0.5 percent, to 2,784.67.
All 10 company groups that make up the S&P index fell. Financial companies fell 1.3%, the largest drop. Citigroup Inc. fell 3% and Goldman Sachs Group fell 2.1% after Bank of America analysts trimmed their earnings forecasts for the two banks.
Analysts noted that they expect the turmoil in the Middle East will make institutional investors more cautious with their cash, leading to a drop in trading revenues.
Each index saw small gains for the week after falling the week before. The Dow had the largest move, inching up 0.3%.
Bond prices rose, sending their yields lower. The yield on the 10-year Treasury note fell to 3.50% from 3.56% late on Thursday. Two stocks fell for every one that rose on the New York Stock Exchange. Volume came to one billion shares.
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