Stocks fell Wednesday, with the three major indexes falling around 2 percent, amid a $5 spike in oil futures and a report showing continued U.S. economic weakness. Light sweet crude oil for July delivery rose $5.07 to $136.38 a barrel on the New York Mercantile Exchange after the U.S. government's weekly petroleum inventory report showed crude supplies fell more than expected. Average retail gasoline prices hit another record above $4.05 a gallon (3.8 liters). Meanwhile, the U.S. Energy Department forecast that oil prices will stay well above $100 a barrel and retail gasoline prices will stay above $4 a gallon through 2009. In economic news, the Federal Reserve (Fed) released its Beige Book survey of economic activity. As expected, it showed continuing weakness in late April and early May amid weaker consumer spending and rising commodity prices. Fed Chairman Ben Bernanke said earlier this week that the central bank will soon need to raise interest rates to fight inflationary pressure and to help the weak U.S. dollar. Fed Vice Chairman Donald Kohn, speaking at a Fed conference on Wednesday, said that the rise in oil prices is increasing consumer inflation expectations and that it is critical for such expectations to be contained. The Dow Jones industrial average fell $205.99, or 1.7 percent, to 12,083.77. Alcoa was the index's biggest loser, tumbling after a brokerage analyst said the aluminum giant is not looking to sell itself or sell part of its business, which will disappoint Wall Street. Other big decliners included financial firms AIG and American Express, and transportation companies Caterpillar and General Motors. The broader Standard & Poor's 500 index fell 22.95, or 1.7 percent, to 1,335.49. The technology-heavy Nasdaq composite index fell 54.93, or 2.2 percent, to 2,394.01. The New York Stock Exchange composite index fell 125.83 to 8,941.27. The American Stock Exchange composite index fell 8.87 to 2,312.39. And the Russell 2000 index fell 14.74 to 717.88.
