Stocks Rattled by Libya Unrest; Oil Prices Jump

Oil producers rose with the prospect of a drop in oil supply. Chevron Corp. gained 1.6%, the largest gain among the 30 large companies that make up the Dow Jones industrial average. Exxon Mobil Corp. rose 1%.

Higher fuel costs hurt airline stocks. Delta Air Lines Inc., American Airlines parent AMR Corp., United Continental Holdings Inc. and US Airways Group Inc. all dropped by 5% or more.

Investors drove into the relative safety of Treasurys, pushing their prices higher and lowering their yields. The yield on the 10-year Treasury fell to 3.46% from 3.59% late Friday.

Brian Bethune, an economist at IHS Global Insight, said a $10 rise in the price of oil subtracts roughly 0.4 perentage point from economic growth. An increase to $150 or $160 a barrel could knock the economy into a recession, Bethune and other economists say.

Higher oil prices also pinch U.S. consumers by pushing up the price of gas. "This puts a damper on consumer optimism, which is really critical at this stage of the recovery," said Alan Gayle, senior investment strategist for RidgeWorth Investments.

Wal-Mart Stores Inc. fell 3% after revenue at stores open at least a year fell for the seventh straight quarter. That raised worries about the company's ability to turn around its U.S. business this year.

Barnes & Noble Inc. fell 14% after the bookseller said its net income fell 25%. The company also suspended its dividend and said it would not forecast its fourth-quarter or full-year earnings following last week's bankruptcy filing by Borders Group.

Falling stocks outnumbered rising ones nine to one on the New York Stock Exchange. Volume was 1.3 billion shares.