NEW YORK (AP) - Oil supply jitters sent stocks sharply lower Monday after Iran's threat to cut its petroleum exports pushed crude prices over $73 a barrel. Iran warned it would curtail distribution if Western nations punish or attack the country over its nuclear arms program. The heightened political tension unnerved a market already concerned that another severe hurricane season could devastate Gulf Coast refineries again. A barrel of light crude jumped $1.02 to $73.35 on the New York Mercantile Exchange.
An expected slowdown in the service sector did little to energize investors, who have grown hopeful that slowing economic activity would keep the Federal Reserve from extending its string of rate hikes. The Institute for Supply Management said its services index for May dropped 2.9 points to 60.1.
More up-and-down trading is expected in the coming weeks after last week's data on manufacturing activity and job growth provided little clarity on inflation and the Fed's plan for interest rates. Evidence of a moderating economy gave stocks some strength toward the end of the week, leaving the major indexes slightly higher.
In midmorning trading, the Dow Jones industrial average lost 72.20, or 0.64 percent, to 11,175.67.
Broader stock indicators also fell. The Standard & Poor's 500 index was down 5.24, or 0.41 percent, at 1,282.98, and the Nasdaq composite index dropped 9.36, or 0.42 percent, to 2,210.05.
Bonds were barely changed after last week's rally, with the yield on the 10-year Treasury note rising to 5.01 percent from 5 percent late Friday. The U.S. dollar was little changed against other major currencies; gold prices returned to about $650 an ounce.
Higher oil prices helped some stocks press upward. Dow Jones industrial Exxon Mobil Corp. advanced 7 cents to $61.72, and ConocoPhillips rose 14 cents to $64.65. Drilling services firm Halliburton Co. rose 14 cents to $76.92.
Harrah's Entertainment Inc. stumbled after it lost a bid to build a new casino resort in Singapore to rival Las Vegas Sands Corp. Harrah's fell 82 cents to $75.58, while Las Vegas Sands slid 47 cents to $70.13.
SanDisk Corp. added $1.40 to $56.53 after Bear Stearns upgraded the flash memory maker to "outperform," citing lesser concerns about near- term oversupply issues.
Declining issues outpaced advancers by 2 to 1 on the New York Stock Exchange, where volume of 141.7 million shares trailed the 224.2 million shares changing hands at the same point Friday.
The Russell 2000 index of smaller companies slid 3.64, or 0.49 percent, to 733.81.
Overseas, Japan's Nikkei stock average slumped 0.77 percent. In afternoon trading, Britain's FTSE 100 gained 0.3 percent, Germany's DAX index lost 0.47 percent and France's CAC-40 was lower by 0.16 percent.
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