The daily surge to new all-time highs that has become like clockwork is the breakout that continues to occur in the energy sector. Crude oil prices have absolutely rocketed higher of late, surging another $2.75 today to close at a staggering level of $107.90. To point out just how common the new highs have become, it has now been 9 out of the last 10 days that crude oil has hit a new high.
The highs haven't in the energy space haven't been contained to crude oil alone, but oil has clearly stood out as the leader to the upside. These constant new highs have some major repercussions for both the economy and the market. After all, the market and the economy are bound at the waist. The market is currently on very uneasy footing almost entirely due to the economic worries that are abound right now.
The effect on the economy is clearly far-reaching. Gasoline prices have risen to a national average of $3.22 a gallon and are clearly set to rise further in the next week or two. This is a huge burden on the American consumer, which is already stretched very thin. The foreclosure rate is rising and people are having to move out of homes they have lived in their entire life, while at the same time they are paying record amounts to fill up their gas tanks. Clearly something has to give in this scenario, and it looks like it will be the American consumer and their spending habits.
The stock market plunged again today, with the Dow falling 1.29% and the S&P 500 losing 1.55%. The inflationary pressures from all commodities are clouding the view on Fed rate policies and the lingering recessionary pressures aren't going away anytime soon. This is just about as uncertain of a time as we have seen in a long while, and that is precisely what the market doesn't like.
Next time you drive by the nearest gasoline station don't be surprised if you just about come unglued. At the same time know that these kinds of price rises aren't just affecting you, it's the entire American economy that is under siege.
» Know More Media Review: Spitzer Scandal, Political Mud Slinging, and Recession Concerns from Know More Media
The last couple of weeks have been quite interesting in terms of news. Last week was dominated by recession news and this week was dominated by scandal. Politics has also been a huge player over the last several months with the... [Read More]
Tracked on: March 14, 2008 6:16 PM | Permalink to Trackback