Stocks tumbled today sparked by rising oil prices as the threat of Tropical Storm Gustav looms around the Gulf Coast and after the government's announcement that personal incomes fell in July. Retail gas prices increased today, the first increase in over 40 days (since gas prices peaked at a national average of $4.114 a gallon back on July 17), after analysts warned that if Tropical Storm Gustav were to hit the Gulf Coast, gas prices could soar as high as $5 a gallon. The Gulf Coast is home to a major portion of our energy infrastructure; roughly 25% of America's crude oil supplies and 40% of our refining capacity is located here. Oddly enough, even with the news, he price per barrel of Crude Oil crude oil fell very slightly, to $115.55 per barrel only dropping $0.04 or 0.03%.
The Commerce Department reported today that personal incomes fell sharply in the month of July. Personal incomes fell by 0.7%, which is the biggest drop in personal incomes in almost three years. Economists expected personal income to drop by only 0.1% in July and this worse than expected report reinforces economists' fears about the economy. Consumer spending increased by 0.2% in the month of July, which was right in line with analysts' expectations, but was far below June's mark of an increase by 0.6%. However, when increased prices was factored in, consumer spending actually fell by 0.4% in July, the weakest consumer spending figure in nearly 4 years. Inflation rose by 0.6% in July bringing our 12 month inflation increase to roughly 4.5%, the greatest year-over-year increase in 18 years. Personal savings were also down in the month of July, and totaled 1.2% of after tax incomes, down from 2.5% in June.
The major news of the day hit the major indices: The Dow, Nasdaq, and the S&P500, all of which traded down on the day. The Dow Jones Industrial Average ended the day at 11543.55, down 171.63 points, or -1.47%. The Dow ended the week down 82.64 points, or -0.71%. The Nasdaq composite index closed at 2,367.52, down 44.12 points, or -1.83%, falling a total of 32.21 points for the week, or -1.34%. The S&P 500 fell to 1282.82, down 17.84 points, or -1.37 from the previous day, with a total loss of 7.65 points or -0.592% for the week.
Gold fell $1.60 or -0.19% to $829.30 per ounce. The Dollar gained on the Euro and is currently at 0.6818 vs. the Euro and fell to 108.78 vs.