Stocks fall as oil prices jump over Libya protests

Stocks took a dive today, as oil prices spiked as investors became worried about increasingly violent protests in Libya. Oil prices rose 6% to $95 a barrel, the uprising threatened the country’s oil production. Libya is the world’s 18th largest oil producer, and accounts for just 2% of the global daily output. It also sits atop the largest oil reserves in Africa. And 250 people have been killed in Libya so far. Key government officials have resigned and air force pilots have defected following a crackdown on protests in Tripoli, Libya’s capital.

Traders are afraid the unrest will soon spread to other oil rich countries in the area, or lead to higher gas prices for consumers. It already has.

Alan Gayle, senior investment strategist for RidgeWorth Investments, said the deepening unrest in the Middle East is bringing back concerns that crude oil prices could surge. “This puts a damper on consumer optimism, which is really critical at this stage of the recovery.” Fox News

The Dow fell 50 points, to 12,341 in morning trading, while Standard and Poor’s 500 index fell 9, or 0.7 percent, to 1,334. The Nasdaq composite index fell 32, or 1.1percent, to 2,802. And all this as arilines are worried this will lead to higher fuel prices. Wal-Mart Stores Inc. fell 3 percent after revenue at stores open at least a year fell for the seventh straight quarter.

Shares of refinery operators Holly Corp. and Frontier Oil Corp. were mixed after they said they would merge in an all-stock deal valued at nearly $3 billion. Holly’s stock rose less than 1 percent, while Frontier’s fell 2 percent.

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Bond prices rose, which pushed yields lower. The yield on the 10-year Treasury note fell to 3.55 percent from 3.59 percent late Friday. Markets were closed Monday for the President’s Day holiday.