Stocks Tumble in Response to Weak Jobless Claims, IEA Announcement

Updated: June 23, 2011 | 1:43 p.m.
June 23, 2011 | 10:21 a.m.

Oil or natural gas rig in Galveston Bay, Texas. (iStockphoto)

Major U.S. stock indexes fell over 1 percent Thursday morning following a surprise gain in weekly jobless claims and an announcement that the International Energy Agency would release crude oil from its strategic reserves.By noon, the Dow Jones industrial average was down 177.81 points following an almost 235-point slump earlier in the morning.

The Dow traded below 12,000, a psychologically important mark, on Thursday. The Standard & Poor’s 500-stock index fell 18.13 points, or 1.41 percent, led by energy stocks as traders responded to the IEA announcement. The Nasdaq composite index slumped 18.76 points, down 0.70 percent.

WTI Crude Dollars Per Barrel*, January 1988 to May 2011

U.S. Strategic Petroleum Reserve, January 1988 to May 2011 (millions of barrels)

*Inflation adjusted; Sources: Energy Information Administration; Graphic by PETER BELL and BRIAN McGILL

Oil prices also fell after the U.S. Department of Energy announced Thursday that it will release 30 million barrels of oil from the Strategic Petroleum Reserve as part of the International Energy Agency’s move to offset oil-supply disruptions caused by unrest in the Middle East. Brent crude, which is used to price many international varieties of oil, fell 6.2 percent to $107.19 per barrel on the ICE Futures exchange.

Initial claims for jobless benefits rose unexpectedly, showing continued weakness in the labor market. Claims rose by 9,000 last week to 429,000, according to the Labor Department. They had been expected to rise by just 1,000.

New home sales also declined in May to a seasonally adjusted annual rate of 319,000, according to a separate report released by the Census Bureau and the Department of Housing and Urban Development. Sales exceeded consensus predictions for 310,000 but are still far below the 700,000 new home sales per year that economists view as a healthy pace, showing the housing market is still struggling to gain traction.

Stocks began to slide late Wednesday after the Federal Reserve announced it had revised its outlook for the U.S. economy downward and would not be implementing any new policies to stimulate growth.

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