Stocks struggle as oil jumps Posted 8/27/2008 10:34:28 AM NEW YORK (CNNMoney.com) -- Stocks struggled Wednesday morning as investors welcomed a surprisingly strong reading on durable goods orders but remained wary as oil prices spiked and Tropical Storm Gustav headed for the Gulf Coast. Bond prices rallied - lowering the corresponding yields - the dollar slumped and gold prices rose. The Dow Jones industrial average (INDU) lost a few points in the early going. The broader Standard & Poor's 500 (SPX) index and the Nasdaq composite (COMP) both saw smaller declines. Stocks were mixed Tuesday as investors mulled higher oil prices and the day's economic news. The tone remained mixed Wednesday. Durable goods orders: Orders for big-ticket manufactured goods jumped for a second straight month, the government reported Wednesday. Orders rose 1.3% in July, easily outpacing the 0.1% gain economists were expecting, on average. The rise was in line with the upwardly revised 1.3% increase reported in June. The strength was largely due to a rise in demand for commercial aircraft, as well as for motor vehicles. Experts don't expect demand for autos to stay strong, considering the tough industry conditions. A category of the report seen as a proxy for business spending also rose soundly, seeing its best results in three months. (Full story). Fuel prices: While the strong durables report was a positive, investors remained concerned about the spike in oil prices as Tropical Storm Gustav neared the Gulf of Mexico and U.S. oil facilities. U.S. light crude oil for October delivery rose $2.50 to $118.77 a barrel on the New York Mercantile Exchange. Investors were also keeping an eye on the oil inventories report, due shortly. (Full story). Retail gas prices continued to drop overnight, extending the downward trend, according to a survey of gas station credit-card activity. Gas prices are down over 10% from all-time highs hit in mid-July. (Full story.) Fed's Lockhart: In a speech Wednesday morning, the Atlanta Fed President discussed the Consumer Price Index, one of the closely-watched measures of consumer inflation. He said the latest CPI was a high and worrisome number but that it is more likely to be transitory than persistent, according to reports. Lockhart also said that the recent rise in the dollar has been helpful. The recent strength in the dollar has put pressure on dollar-traded commodities, such as oil and gold. In a speech delivered Wednesday morning, Atlanta Fed President Dennis Lockhart said that he expected CPI, one of the favored measures of consumer inflation, to peak near its July levels when it hit an annual rate of 5.6%. He added that if prices don't moderate as expected, inflation expectations could become "unmoored." (0) Comments

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