Wall St ends lower as tech and energy shares drag

* Oil sinks to five-month low as Gustav spares production
* Energy, materials, tech shares slide
* News of hedge fund closure seen contributing to fall
* Dow down 0.2%, Nasdaq down 0.8%, S&P down 0.4%

NEW YORK - US stocks fell on Tuesday, as a steep decline in the price of oil and other commodities hammered energy and materials companies while tech shares fell amid jitters a global economic slowdown would crimp technology spending.

The market reversed sharp gains notched at the beginning of the day, as commodity-related shares sold off. Analysts said the drop in those shares was likely further fuelled by the closure of a hedge fund announced after the bell.

The market had initially soared more than 1 percent as oil prices fell to a five-month low on relief that damage to energy infrastructure from Hurricane Gustav appeared to be limited.

The lower oil prices also had buoyed hopes of a recovery in consumer and business spending.

But as fears faded that Gustav would cause a prolonged disruption to energy supplies, the focus shifted to one of the reasons for oil's decline since its record peak in July: fears of slowing world energy demand.

After the closing bell another potential reason for the market's reversal emerged, when Ospraie Management told investors it would close down a fund that lost 27 per cent in August amid a sell-off in energy, mining and resource equity holdings.

Lehman Brothers Holdings Inc took a 20 per cent stake in Ospraie in 2005. Lehman's shares were down more than 4 per cent in after-hours trading.

The Dow Jones industrial average dropped 26.63 points, or 0.23 per cent, to 11,516.92. The Standard & Poor's 500 Index dropped 5.26 points, or 0.41 per cent, to 1,277.57. The Nasdaq Composite Index dropped 18.28 points, or 0.77 per cent, to 2,349.24.

In addition, worries that tech companies will suffer as the global economy slows, which sent markets tumbling on Friday after computer maker Dell Inc warned that companies worldwide are cutting back on technology spending.

Even during the market's sharp gains earlier in the session, technology shares did not gain as much.

US crude settled down US$5.75 to US$109.71 a barrel, below the 200-day moving average of around US$111.

Source: Singapore Business Times - 03 Sep 2008