US stocks open lower after downgrades, rising oil

US stocks tumbled early Thursday as oil prices jumped and Goldman Sachs downgraded the brokerage sector, including Citigroup Inc. The major indexes showed losses of more than 1 percent, including the Dow Jones industrial average, which shed more than 100 points.

Goldman's move came as investors were digesting comments from technology bellwether Oracle Corp., which said after the closing bell Wednesday that the traditionally slow summer months could prove particularly difficult in a weak economy. The remarks from the maker of business software dented a notion that technology companies could show resistance to a weakening economy.

Research In Motion Ltd., maker of the BlackBerry devices, also issued a forecast that disappointed investors. And an analyst downgraded three members of the automotive sector, including General Motors Corp., saying that while the industry may not have seen the worst.

Wall Street's cautious turn came a day after the Federal Reserve interrupted a series of interest rate cuts by leaving rates unchanged and warning of an increased threat of inflation. Stocks, which posted uneven gains Wednesday after the Fed's decision, also benefited during that session from a decrease in oil prices.

But oil prices rebounded Thursday, adding to Wall Street's inflation concerns. OPEC President Chakib Khelil was quoted as telling a French television station that oil could rise to between $150 and $170 per barrel this summer before possibly pulling back. That and a falling dollar helped send light, sweet crude up $2.69 to $137.24 a barrel on the New York Mercantile Exchange. Rising oil has saddled nearly all parts of the economy with higher costs. The increased expenses have also weighed on consumers who now have to reach much deeper into their wallets at the gas pump and therefore have less to spend elsewhere.

In the first hour of trading, the Dow Jones industrial average fell 123.03, or 1.04 percent, to 11,688.80.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 14.06, or 1.06 percent, to 1,307.91, and the Nasdaq composite index fell 37.82, or 1.58 percent, to 2,363.44.

(Agencies)