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NEW YORK (
TheStreet) -- Stocks got off to a rough start in March, selling off Tuesday as oil prices crept back to $100 a barrel, despite
Federal Reserve Chairman Ben Bernanke's statement that the impact of the recent spike is likely to be only temporary.
Dow Jones Industrial Average shed 168 points, or 1.4%, to close at 12,057. The
S&P 500 finished lower by 21 points, or 1.6%, at 1306, and the
Nasdaq Composite shed 45 points, or 1.6% to close at 2737.
Caterpillar(CAT - Get Report),
General Electric(GE) led the Dow's decline, while
Wal-Mart(WMT) were leaders among the blue-chips.
Oil prices surged Tuesday, as Middle East tensions showed no signs of abating, once again sparking fears that the U.S. economy will stumble. Although
international leaders have stepped up pressure against longtime Libyan leader Moammar Gadhafi
, with the U.S. government freezing $30 billion in Libyan assets, the fighting continued to rage Tuesday. Forces loyal to the dictator still hold Tripoli and nearby cities but have lost control of the eastern half of the country, the
In Iran, security forces clashed with protesters calling for the release of two opposition leaders in Tehran
. Crude oil for April delivery rose $2.66 to settle at $99.63 a barrel, its highest close since September 2008.
semi-annual monetary policy report to the Senate Banking Committee, Fed Chairman Ben Bernanke
reiterated his expectations for modest inflation in the near-term but hastened to assure legislators that the central bank was keeping a close eye on commodity prices as the conflict in the Middle East continues.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation -- an outlook consistent with the projections of both FOMC participants and most private forecasters," Bernanke testified. "That said, sustained rises in the prices of oil or other commodities would represent a threat both to economic growth and to overall price stability, particularly if they were to cause inflation expectations to become less well anchored."
Bernanke added, "We will continue to monitor these developments closely and are prepared to respond as necessary to best support the ongoing recovery in a context of price stability."
Federal Reserve Chairman Ben Bernanke
Quincy Krosby, market strategist at Prudential Financial, said Bernanke is clearly sticking to his script in his insistence that higher commodity prices aren't fueling inflationary pressures.
"When you look at it from the standpoint of the market, the nervousness stems from the fact that you are seeing input costs rising. During the last earnings season, the guidance was very much calling attention to higher input costs and the effect on margins, so the fact that Bernanke is denying that belies the fact that CEOs are talking about it," she said.