Rally Fizzles Despite Oil's Drop

Traders becoming more focused on economic strength than fuel
By Nick McMaster,  Newser Staff
Posted Sep 2, 2008 3:13 PM CDT
The Discoverer Deep Seas drill ship sits on station off the coast of Louisiana as Chevron drills for oil in the Gulf of Mexico in this file photo.   (AP Photo)
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(Newser) – An early rally faded today and the markets closed with mild losses, the Wall Street Journal reports. Oil fell $5.75 as Gulf Coast oil-production facilities appeared to have emerged mostly unscathed from Hurricane Gustav, but the news failed to give equities lasting momentum. The Dow closed down 26.63, at 11,516.92. The Nasdaq fell 18.28, to 2,349.24, while the S&P 500 lost 5.27 to settle at 1,277.56.

With US consumers entering a post-Labor Day lull in fuel demand, traders are seeing oil decouple from its months-long inverse relationship to shares. Worries have refocused more on the global economy, as slowdowns in other nations threaten the strong exports that have provided a crutch to US economic growth during the credit crisis.