NEW YORK Stocks resumed their steep slide Friday as investors appeared to take little comfort from a better-than-expected home sales report and remained focused on the toll high oil prices would take on the economy. The Dow Jones industrials gave up more than 150 points ahead of the three-day holiday weekend.
The report from the National Association of Realtors showing that existing home sales fell 1 percent in April, rather than declining 1.6 percent as had been expected, offered little comfort about the still-crippled housing market.
High fuel prices at the start of the Memorial Day weekend and the summer driving season dominated trading Friday. Drivers setting out for vacation will find that gasoline prices are up nearly 20 percent, or 65 cents a gallon, in the past year.
While spending out more at the pump is hard for businesses and consumers alike, Wall Street is worried that consumers, who account for more than two-thirds of U.S. economic activity, will cut back to make room in their budgets for gas that has topped $4 a gallon in some parts of the country.
Light, sweet crude is up 37 cents at $131.18 per barrel on the New York Mercantile Exchange. Oil is set for a third weekly gain after surging to a record $135.09 a barrel on Thursday. Some investors are buying on the belief that global demand from countries like China and India will outstrip supply. A weak dollar also makes each barrel more expensive.
"Crude oil is still weighing on the market and particularly because this is a traditional driving holiday," said Chris Orndorff, director of equity strategy at Payden & Rygel in Los Angeles.
Many traders took Friday off before the long holiday weekend, and lighter volume often contributes to more volatility in stocks and the major indexes.
In early afternoon trading, the Dow fell 156.73, or 1.24 percent, to 12,468.89.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 20.21, or 1.45 percent, to 1,374.14, and the Nasdaq composite index fell 31.92, or 1.30 percent, to 2,432.66.
The economic fallout from higher energy prices commanded Wall Street's focus this week. Stocks managed to post gains Thursday following the Dow's biggest two-day loss since late February. Despite the declines of more than 2 percent in the major indexes this week, stocks are off their mid-March lows. The Dow is still up 7.5 percent from its close of 11,740.15 on March 10.
Bond prices rose Friday as stocks declined. The yield on the benchmark 10-year Treasury note, which moves opposite its yield, fell to 3.85 percent from 3.92 percent late Thursday.
The dollar was mostly higher against other major currencies, and gold was also higher.
In corporate news, Gap Inc. fell 37 cents, or 2 percent, to $17.92 after reporting that its first-quarter profit surpassed Wall Street's projections. The retailer said it boosted earnings 40 percent by improving how it managed inventory and trimming costs.
Halliburton Co., which provides oilfield services, made a $3.4 billion bid to acquire British rival Expro International Group. Halliburton fell $1.41 to $47.60.
A Financial Times report that brewing company InBev is readying a $46 billion takeover bid for Budweiser maker Anheuser-Busch Cos. failed to shake Wall Street from its downcast mood. Often buyout activity is fodder for a rally in stocks as it as seen as a bullish sign for the economy. But the buying appeared limited to the St. Louis brewer, whose shares hit an all-time high. Anheuser-Busch rose jumped $6.71, or 3.5 percent, to $56.11.
Yahoo Inc. said in regulatory filing that it pushed its annual shareholders meeting to an undetermined date in late July. The move was seen giving the Internet portal more time to prepare a defense or negotiate a sale to Microsoft Corp. Yahoo fell 17 cents to $27.36, while Microsoft declined 40 cents to $28.07.
American Axle and Manufacturing Holdings Inc. fell 85 cents, or 4.4 percent, to $18.40 after the company said that workers approved a contract including pay cuts and other concessions. The vote ends a strike that lasted nearly three months, hurting General Motors Corp.'s production of large sport utility vehicles and pickup trucks. Although the contract's ratification will benefit GM, auto stocks have been under pressure this week because of soaring fuel prices. GM, one of the 30 stocks that comprise the Dow industrials, fell 92 cents, or 5 percent, to $17.51.
Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 593.9 million shares.
The Russell 2000 index of smaller companies fell 10.85, or 1.48 percent, to 722.16.
In overseas trade, Tokyo's Nikkei closed rose 0.24 percent. In Europe, London's FTSE ended down 1.53 percent, Frankfurt's DAX fell 1.79 percent and Paris' CAC 40 shed 1.89 percent.