Oil Surges, Stocks Drop on Mideast Unrest; Gold Hits Record - Bloomberg

Oil surged to a 29-month high amid speculation unrest in the Middle East and northern Africa will disrupt supplies. U.S. stocks sank on concern rising energy costs will threaten the economic recovery, while Treasuries reversed losses and gold advanced to an all-time high.

Oil for April delivery rallied 2.7 percent to settle at $99.63 a barrel, the highest since Sept. 30, 2008. The Standard & Poor’s 500 Index slid 1.6 percent to 1,306.33 at 4 p.m. in New York after yesterday capping a third straight monthly gain. Ten- year Treasury yields lost three basis points to 3.40 percent after rising six points earlier. Gold futures for April delivery climbed as much as 1.8 percent to a record $1,435.60 an ounce.

Energy prices jumped as unrest threatened to spread from Libya to Iran, OPEC’s second-largest oil producer. Concern higher energy costs will hurt consumer spending and corporate profits overshadowed data showing that U.S. manufacturing grew at the fastest pace since 2004. Federal Reserve Chairman Ben S. Bernanke said the increase in oil and other commodity prices probably won’t cause a permanent increase in broader inflation, suggesting the central bank will continue its stimulus efforts.

“There’s a cloud over the market,” said Burt White, who helps oversee $284 billion as chief investment officer at LPL Financial Corp. in Boston. “We’ve had very strong manufacturing data,” he said. “Bernanke said that the fire is not hot enough for the Fed to take the foot off the gas pedal and put it on the brake. They are committed to spur the economy going forward. Still, the market will struggle as people are more concerned about oil than the strength of the U.S. economy.” more ...