Stocks trade mixed as oil climbs

Stocks traded mixed Monday after another spike in oil prices and a decline in regional manufacturing activity touched off concerns about the ability of the economy to push ahead.

A declining dollar helped drive the price of a barrel oil to a record near $140 while retail gas prices etched a new high of $4.08 a gallon.

Treasury prices advanced after falling sharply last week amid worries that inflation would erode returns.

While sectors like financials, materials and technology showed strength Monday, worrisome economic news appeared to weigh on parts of the market. The New York Federal Reserve Bank's Empire State index indicated that manufacturing activity in New York State continued to weaken in June. The index fell to a negative 8.7 from a negative 3.7 a month earlier. The report is the earliest of several monthly regional snapshots that investors look to for insights on economic activity.

The manufacturing report and the jump in energy prices appeared to fan worries that rising prices in an already uncertain economy will cause consumers to tamp down spending. A pullback could deal a blow to the economy, as consumer spending accounts for more than two-thirds of U.S. economic activity.

"A lot of people are very worried about the economy," said Thomas Nyheim portfolio manager at Christiana Bank & Trust Co. "Oil prices are where they are starting to hit the consumer."

He contends that investors will continue to look for safe investments and that the stock market's fortunes will remain tethered to oil prices in the coming months as investors search for clues about the well-being of the economy.

In early afternoon trading, the Dow Jones industrial average fell 43.89, or 0.36 percent, to 12,263.46.

Broader stock indicators were mixed after trading lower in the early going. The Standard & Poor's 500 index fell 3.35, or 0.25 percent, to 1,356.68. The Nasdaq composite index, which contains many technology names, rose 7.65, or 0.31 percent, to 2,462.15.

Advancing issues outnumbered decliners by about 8 to 7 on the New York Stock Exchange, where volume came to 588.3 million shares.

The moves follow a strong session Friday that left the Dow with a weekly advance and lessened the declines that the S&P 500 and the Nasdaq posted for the week.

Bond prices rose Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.22 percent from 4.26 percent late Friday.

The dollar was mixed against other major currencies, while gold prices rose.

Oil prices jumped as the dollar fell. And investors seemed largely unswayed by Saudi Arabia's plans to boost production. Light, sweet crude set a trading record of $139.89 a barrel on the New York Mercantile Exchange, but later were up 89 cents at $135.75.

Oil prices, which have doubled in the past year, have sent stocks sharply lower at times in recent weeks as investors worried about the toll of rising prices on the economy.

Stocks of financial companies rose after Lehman Brothers Holdings Inc. offered investors some relief by not reporting results that were worse than feared. The company posted a second-quarter loss of $2.87 billion, or $5.14 per share. The figures were unchanged from what the nation's No. 4 investment bank projected a week ago. The loss, the first for Lehman since it went public in 1994, follows misplaced hedges and trading positions. Lehman rose 79 cents, or 3.2 percent, to $26.60.

Insurer American International Group Inc. named former Citigroup Inc. executive Robert Willumstad as chief executive. Willumstad replaces Martin Sullivan after AIG logged billions in losses on bad bets in the mortgage market. AIG, one of the 30 stocks that comprise the Dow industrials, fell 20 cents to $33.98.

The Russell 2000 index of smaller companies rose 2.16, or 0.29 percent, to 735.77.

Overseas, Japan's Nikkei stock average rose 2.72 percent. Britain's FTSE 100 closed down 0.14 percent, Germany's DAX index declined 0.52 percent, and France's CAC-40 fell 0.52 percent.

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