Oil prices backed off Tuesday (Sept, 23) after a record-breaking spike a day earlier.
Light, sweet crude for November delivery fell $4.70 to $104.67 on the New York Mercantile Exchange. The October contract, which expired Monday, surged as much as $25.45 to $130 before falling back to settle at $120.92, an advance of $16.37. While that gain was due to technical market dynamics, the price of oil has still moved higher over the past week amid increasing concerns about the U.S. financial system, according to the Associated Press.
Investors were watching oil prices after anxiety over the government bailout plan and a huge short-covering rally pushed crude to the biggest one-day gain.
“We’re going to see this volatility for a while even after this package passes because I think we’re still facing a fundamental slowdown in the economy worldwide which is going to have some impact on earnings,” said J. Stephen Lauck, chief executive and portfolio manager at Ashfield Capital Partners in San Francisco.
Financial stocks fell as Congress debated the merits of the government’s emerging plan. Some investors are worried that the plan could still prove inadequate to save some banks. Should the government pay too little for assets some banks might be forced to book ruinous write-downs and perhaps go under.
Bank of America Corp. fell $1.02, or 3%, to $33.13, while Citigroup Inc. fell 95 cents, or 4.8%, to $19.06.
Some energy names lost ground as oil traded well off the levels seen in Monday’s spike. Occidental Petroleum Corp. fell $3, or 3.7%, to $78.24 and XTO Energy Inc. declined 4 cents to $52.40.