Wall Street Follows Dow Chemical Lower

Updated from 4:09 p.m. EST

Stocks in New York ended Monday with modest losses in a less-than-merry start to the final week of 2008.

While they ended in negative territory, each of the major indices remained off their worst lows of the day. The Dow Jones Industrial Average, earlier in the day off as much as 151 points, in the end shed 31.62 points, or 0.4%, to 8483.93. The S&P 500 edged down 3.38 points or 0.4% to 869.42, and the Nasdaq lost 19.92 points or 1.3% to 1510.32.

Oil rose $2.31 to settle at $40.02 a barrel after a volatile day with early and late rallies attributed to the possibility that Israeli attacks in Gaza could lead to restrictions in regional supply.

We are seeing a bit of a rally in oil off of the lows posted last week, but you have to take it at face value, says Darin Newsom, DTN senior analyst. It's a knee-jerk reaction that's in part end-of-the-year short-covering and possibly some headline-following on its role as a geopolitical hedge, he says.

It doesn't mean that prices won't go back up -- just that the initial round of buying came in as the market reacted to the news, says Newsom. That said, "What we're left with is a fundamental supply and demand situation that is bearish, and if we continue to look at the future spread as an indicator, it still looks bearish as well," he says.

Oil is headed for a nearly 60% loss this year, the biggest annual fall since futures began trading 25 years ago, according to CNBC.com.