NEW YORK (CNN/Money) -
Stocks slumped Wednesday, with the Dow losing 101 points, as investors eyed record high crude oil prices that jumped above $61 a barrel.
Nasdaq and S&P 500 futures pointed to a modestly lower open Thursday, when fair value is taken into account.
The Dow Jones industrial average (down 101.12 to 10,270.68, Charts) lost around 1 percent. The broader Standard & Poor's 500 (down 10.05 to 1,194.94, Charts) index lost 0.8 percent.
The Nasdaq composite (down 10.10 to 2,068.65, Charts) lost 0.5 percent, after posting modest gains earlier in the session.
U.S. light crude oil for August delivery climbed $1.69 to settle at a record $61.28 a barrel on the New York Mercantile Exchange. Prices surged as investors worried that tropical storms would hurt production in the Gulf of Mexico.
Crude also set a new record, trading high for a front-month contract of $61.35 during the session.
Concerns about higher oil prices have pressured stocks for some time. However, those jitters have intensified in recent weeks, since sustained higher oil prices raise costs for companies and can curtail consumer spending.
"Oil is certainly dominating the market right now," said Timothy Ghriskey, chief investment officer at Solaris Asset Management. "Yesterday, crude moved above $60 but then pulled back by the close. Today you didn't see that."
"There's no sense of what the proper level for oil should be right now, it could go a lot higher, it could fall," he added. "The one positive is that if we are at the top of a trading range, when crude heads back down to the mid- to high-50s you could see a little market rally, because stocks do tend to react favorably to a pullback."
The worries about oil prices overshadowed a strong read on the service sector of the economy.
Strength in select tech stocks seemed to protect the Nasdaq against bigger losses.
While worries about oil prices are likely to remain in the forefront this week, they will share the stage with news about earnings and the labor market.
On Thursday Alcoa (down $0.20 to $26.00, Research) unofficially starts the earnings-reporting period.
Friday brings the closely watched June jobs report. Employers are expected to add 194,000 to their payrolls during the month, according to a consensus of economists surveyed by Briefing.com. Employers added a surprisingly low 78,000 to their payrolls in May.
"The projected job growth number would mark a pretty strong snapback from the previous month," said Jack Ablin, chief investment officer at Harris Trust. Stock investors may be anticipating that rebound, he added.
Thursday brings the weekly oil inventories report and the read on weekly jobless claims.
A number of retailers will also report their June sales. Some began doing this Wednesday after the close, including Starbucks (Research).
The coffee retailer reported that same-store sales, or sales open a year or more, rose 7 percent from a year ago, in line with estimates. However, shares inched lower in after-hours trading.
Aeropostale (Research), a teen apparel retailer, reported weaker-than-expected June same-store sales growth and warned that second-quarter earnings would miss forecasts. Shares slumped after the bell.
In other after-the-bell news, Murphy Oil (down $1.03 to $53.27, Research) rose after the company boosted its second-quarter earnings forecast.
Stocks hit hardest Wednesday were blue chips that would suffer more from higher oil and fuel costs.
The Dow's biggest losers included Home Depot (down $0.81 to $39.27, Research), United Technologies (down $1.09 to $50.55, Research), Honeywell (down $0.52 to $35.44, Research), Boeing (down $1.13 to $64.29, Research) and Merck (down $0.54 to $30.56, Research).
Dow 30 component Exxon Mobil also slumped -- oil stocks were weak across the board, despite the rise in the commodity price, as investors took profits after pushing the stocks higher recently.
The Dow's lone gainers were IBM (up $1.02 to $75.81, Research) and Hewlett-Packard (up $0.25 to $23.96, Research), reflecting the better performance of tech on the session.
Xilinx (up $0.78 to $26.46, Research) and Advanced Micro Devices were among the names firing up the chip sector, sending the Philadelphia Semiconductor (up 4.46 to 430.33, Charts) index, or the SOX, up 1.1 percent.
Wednesday also brought plenty of merger news.
General Electric (down $0.40 to $34.32, Research)'s commercial finance unit said it would acquire around $1 billion in aircraft assets from CIT Group (up $0.65 to $43.25, Research). GE shares slipped and CIT Group shares edged up.
In addition, Zions Bancorp (down $4.69 to $68.67, Research) has said it will buy Amegy Bancorp (down $1.05 to $21.93, Research) for $1.7 billion. Shares of both fell on the news.
Market breadth was negative. On the New York Stock Exchange, losers beat winners nine to seven on volume of 1.45 billion shares. On the Nasdaq, decliners topped advancers by four to three on volume of 1.58 billion shares.
Stocks surged Tuesday, the first trading day of the week after the Fourth of July, on an upbeat read on factory orders and a strong forecast for June sales from Wal-Mart. Financial markets were closed Monday for the holiday.
In the morning's economic report, the Institute for Supply Management said its service sector index rose to 62.2 in June from 58.5 in May. Economists surveyed by Briefing.com forecast a smaller increase to 58.9 in June.
Treasury prices rose, lowering the yield on the 10-year note to 4.07 percent from 4.10 percent late Monday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar fell versus the euro and gained versus the yen.
COMEX gold rose 60 cents to settle at $424.50 an ounce.