Oil prices have negative impact on stocks

Stocks fell yesterday as higher oil prices weighed on the market.

Oil hit a two-year high early in the day, nearing $107 a barrel, after forces loyal to Libyan leader Moammar Gadhafi launched airstrikes against opposition fighters at an oil port.

The market has been shaken in recent weeks by the uprising in Libya and its effect on oil prices.

Stocks had started higher on news of two corporate deals. Hard drive maker Western Digital Corp. jumped 16 percent after announcing plans to buy Hitachi Global Storage Technologies for $4.3 billion. French fashion conglomerate LVMH Moet Hennessy Louis Vuitton says it will buy Italian jeweler Bulgari SpA for $6 billion.

The Dow Jones industrial average fell 79.85 points, or 0.7 percent, to close at 12,090.03.

The Standard & Poor's 500 index fell 11.02 points, or 0.8 percent, to 1,310.13.

The Nasdaq fell 39.04 points, or 1.4 percent, to 2,745.63.

All three indexes have lost more than 1 percent so far this month.

The dollar rose, as did utility companies. The utility company index within the S&P 500 gained 0.4 percent even though the overall index declined. The CBOE Market Volatility Index jumped 8 percent to 20.66, a sign that investors expect stock trading to become more turbulent.

Starbucks rose 1.4 percent after CEO Howard Schultz told The Wall Street Journal the company is looking for companies to acquire. McDonald's Corp. rose 0.3 percent, the biggest gain among the 30 companies that make up the Dow average. Alcoa Inc. fell the most, 2 percent.