Stocks plunge in the US

Stocks plummeted in the United States today as heightened fears of another hurricane hitting the Gulf Coast sent oil prices racing past 67dollars a barrel and investors grew anxious about the Federal Reserve’s upcoming interest-rate meeting.

Wall Street saw some bright spots in merger activity and strong earnings from Nike Inc. and Carnival Corp., but the market became increasingly uneasy as surging energy prices threatened consumer spending.

Investors also awaited the Fed’s decision whether to raise rates or halt its string of increases to mitigate an economic slide following Hurricane Katrina.

With an intensifying Tropical Storm Rita nearing Florida’s tip and poised to hammer the Gulf Coast just weeks after Katrina, the market retreated heavily late in the session amid light trading volume.

“Front and centre would be concerns of the storm approaching tomorrow, of which you’re seeing crude oil trading up 4dollars,” said Steven Goldman, chief market strategist at Weeden & Co., who noted a steep decline in oil prices at midday.

Crude oil gained even as OPEC neared a consensus on selling 2 million additional barrels a day to offset a potential supply shortage from recent refinery shutdowns. On the New York Mercantile Exchange, a barrel of light crude jumped 4.39dollars to 67.39dollars, as gasoline futures climbed 24 cents to 2.04dollars a gallon.

The Dow Jones industrial average dropped 84.31, or 0.79%, to 10,557.63. The Dow declined as much as 120.69 during the session.

Broader stock indicators also dropped. The Standard & Poor’s 500 index fell 6.89, or 0.56%, to 1,231.02, and the Nasdaq composite index sank 15.09, or 0.7%, to 2,145.26.

Bonds rose, with the yield on the 10-year Treasury note sliding to 4.25% from 4.27% on Friday. The US dollar was mixed against other major currencies in European trading, while gold prices gained a second day and set a fresh 17-year record.

Although Wall Street is uncertain about what the Fed’s decision is likely to be, many analysts are predicting the central bank will continue lifting rates o stem inflation and will keep that as its main priority despite the widespread economic ripple left in Katrina’s wake. The Fed’s policy announcement is expected Tuesday afternoon.

“I don’t see where they’re going to be able to back down with inflation increasing the way it is and oil rising,” said Bill Groenveld, head trader at vFinance Investments.

Groenveld also said Rita was another concern for the market as it approached the southern end of Florida en route to the Gulf of Mexico. Some meteorologists were forecasting that the storm could strengthen into a hurricane by the Monday night.

In corporate news, Nike, the world’s biggest shoemaker, said higher sales across the board helped lift its first-quarter profit 32% to easily beat Wall Street expectations. Worldwide future orders for products scheduled for delivery through January 2006 grew 11% to 4.9 billiondollars, the company added. Nike surged 4.99dollars to 83.45dollars.

Cruise-ship operator Carnival posted a 12% gain in third-quarter profit, as revenue swelled from increased ship capacity and ticket prices. The company also said while the hurricane has depressed results in the latest quarter, recent bookings remain strong and average prices are above the year before. Carnival added 1.75dollars to 50.78dollars.

On the acquisition front, Norway-based Norsk Hydro ASA said it agreed to buy oil and gas firm Spinnaker Exploration Co. for 2.45 billion dollars in a move to beef up its Gulf Coast operations.

Hewlett-Packard Co. is paying 425 million dollars in cash for Peregrine Systems Inc., a maker of software for managing computer systems. Spinnaker jumped 15.40dollars to 64.15dollars, and Peregrine gained 6.22dollars to 25.32dollars.

Declining issues outpaced advancers by 11 to 5 on the New York Stock Exchange, where volume of 1.56 billion shares fell short of the 2.55 billion shares traded at the same point Friday, when options trading increased the number of shares that changed hands.

The Russell 2000 index of smaller companies fell 4.96, or 0.74%, to 667.02.