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Stocks drop as oil prices decline, rate worries persist

NEW YORK - Stocks were solidly lower Friday, caused by a drop in oil prices and worries about higher interest rates. Energy companies and utilities had the biggest declines.

The Dow Jones industrial average lost 218 points, or 1.2 percent, to 17,677 as of 3:00 p.m. ET. The Standard & Poor's 500 index fell 20 points, or 1 percent, to 2,046. The Nasdaq composite was down 39 points, or 0.8 percent, to 4,854.

The price of oil declined after the Energy Information Administration reported that U.S. crude supplies continue to rise last week. The International Energy Agency, meanwhile, said Friday in its monthly report that the "rebalancing triggered by the price collapse has yet to run its course" and that oil prices were likely to fall further. U.S. crude fell $1.80 to $45.24 a barrel while Brent fell $1.44 to $55.84 a barrel in London.

Energy stocks fell more than the rest of the market. Transocean, the offshore oil rig company, fell 58 cents, or 4.5 percent, to $13.69 and Halliburton fell 90 cents, or 2.2 percent, to $40.09. Denbury fell 42 cents, or 6 percent, to $7.19.

Stocks that pay higher dividends, such as utilities, were also big decliners Friday. The Dow Jones utility index fell 1.2 percent. That index is down nearly 8 percent so far this year.

A growing number of investors believe the Federal Reserve will raise its benchmark interest rate as early as June. Higher rates are typically bad for high-dividend stocks because it diminishes their appeal to investors seeking income. The Fed meets next week to discuss monetary policy.

The U.S. dollar continued its advance against other major currencies. The euro declined 1.3 percent to $1.0484. The U.S. dollar index, which measures the dollar against a basket of other currencies, was up 0.8 percent Friday and up 6.4 percent in the past month.

A higher dollar makes U.S. exports more expensive abroad. Material stocks, like steelmakers, and U.S. companies that make expensive exports such as General Electric, Caterpillar and Deere were also among the biggest decliners.

The week started with growing anxiety over when the Fed will start raising rates following a run of upbeat U.S. economic data, including February's nonfarm payrolls report. However, soft retail figures for January, released Thursday, have tempered those expectations. A report on producer prices, a measure of inflation, released Friday showed inflation remains under control. The three major U.S. stock market indexes are down slightly for the week.

"Coming as it did on the back of two previously disappointing months, the weak (retail sales) number has once again seeded doubts about how the Federal Reserve might react next week," said Michael Hewson, chief market analyst at CMC Markets.

Bond prices rose slightly. The yield on the 10-year Treasury note fell to 2.10 percent from 2.12 percent.

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