April 7th, 2011
08:05 PM ET

Second Japan quake stokes uncertainty, sending oil prices up and stocks down

A roundup of the day's business news headlines:

Stocks fall slightly following Japan quake

U.S. stocks fell slightly Thursday after Japan was hit with another major earthquake and the price of oil rose above $110 a barrel.

The Dow Jones industrial average fell 17 points, or 0.1%, to 12,409; the S&P 500 dropped 2 points, or 0.2%, to 1,334; and the Nasdaq Composite lost 3.6 points, or 0.1%, to 2,796.

A 7.1-magnitude earthquake occurred off the coast of Japan shortly after 10:30 a.m. ET, only a few miles west the March 11 earthquake. The news sent the Dow down as much as 95 points, but stocks slowly recovered throughout the afternoon.

Japan's news agency NHK issued a tsunami warning that was lifted two hours later, with no reports of major damage. The troubled Fukushima-Daiichi nuclear power plant did not experience any further damage, according to NHK.

Oil tops $110 after Japan suffers another blow

Oil prices jumped above $110 a barrel, a fresh 2-1/2 year high, after Japan was hit with another major earthquake.

May oil futures settled up $1.47, or 1.4%, to $110.32 a barrel. Prices had jumped as high as $110.44 - a level not seen since September 2008.

The gains came after a 7.1-magnitude earthquake occurred around 10:30 a.m. ET, near the same location off the coast of Japan as the March 11 earthquake.

The tsunami warning was lifted two hours later, with no reports of major damage. But the second earthquake stoked fears about the long-term viability of nuclear power in Japan, and revived speculation about a short-term spike in energy demand as the nation rebuilds, said Doug Roberts, chief market strategist for Channel Capital Research.

"It also creates uncertainty in the market," he said. "And whenever there's uncertainty, people tend to build in a speculative premium."

The crisis at the Daiichi plant, where workers have been struggling to cool reactors and contain radioactive leaks, has heightened concerns about the safety of nuclear power in a country prone to violent seismic activity. While Japan could use fossil fuels such as diesel to deal with temporary shortfalls in electricity, analysts said natural gas is a more likely substitute if the nation moves away from nuclear power over the long term.

Meanwhile, oil prices have surged some 20% so far this year as the political spasms in North Africa and the Middle East have raised worries about supply. In Libya, oil production has been almost entirely halted for weeks amid a deadly stalemate between forces loyal to Moammar Gadhafi and rebel fighters.

- CNNMoney.com reporters Ben Rooney and Ken Sweet contributed to this report.

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Filed under: 2011 tsunami • Economy • Libya
soundoff (5 Responses)
  1. venture capitol

    The current economic momentum can be carried forward as long as oil does not reach 130 per barrel.
    The American people will spend freely up to that level.

    April 7, 2011 at 8:12 pm | Report abuse |
  2. 87 octane

    I'm off on fridays..think I'll buy some gas... .

    April 7, 2011 at 10:08 pm | Report abuse |
  3. Joel Raes

    Sending the prices up ? What stupid reason. I am sick of the high priced gas!


    Joel Raes

    April 8, 2011 at 10:57 am | Report abuse |
  4. Philip

    @venture capitol...I have a parrot that can do that.

    April 8, 2011 at 3:13 pm | Report abuse |
  5. Philip

    Your grandparents paid more for gasoline back in the 60s and 70s (price of gas vs. average income) So quit complaining already. sheesh!

    April 8, 2011 at 3:15 pm | Report abuse |