Stocks declined sharply earlier this week due to the drag of high energy prices on the economy, and the Dow Jones industrial average dropped more than 100 points, or 0.89 percent, to 12,160.30, finally falling on Wednesday to 12,029.06. Although the core producer price index, which excludes food and energy prices, increased by a mild 0.2 percent, higher energy prices are strapping businesses and increased costs may be passed on to consumers.
Broader stock indicators also posted a decrease. The Standard & Poor’s 500 index fell 9.21, or 0.68 percent, to 1,350.93, and the Nasdaq composite index fell 17.05, or 0.69 percent, to 2,457.73. In addition, Goldman Sachs intensified economic concerns by releasing a downbeat report on the broader banking industry, indicating that credit losses from deterioration in the mortgage and lending markets will not fully peak until early 2009.
The struggling housing market is still in the midst of a decline. In May, the government reported a 3.3 percent decrease in home construction and a 1.3 percent decline in building permits, further confirming the persistent and continuing weakness in the housing market. Additional reports reported a 0.2 percent drop in industrial production during May, a slight improvement from the 0.7 percent decline posted in April.
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