I’m not sure if they’ll end up calling this the oil shock of 2008, but it’s certainly having an impact:
The markets opened lower on Friday and then just kept falling, hit by remarkable rise in the price of crude oil and a spike in the unemployment rate.
Wall Street suffered its worst losses in more than two months.
The Dow Jones industrials plunged nearly 400 points on fears about high energy prices and a continued economic slowdown, raw nerves that have pestered investors for months.
“The market is meeting its worst fears right now,” said Quincy Krosby, chief investment strategist at The Hartford, a financial services firm.
At the close, the Dow was off 3.13 percent, or 394.64 points, to 12,209.81. The broad-based Standard & Poor’s 500-stock index fell 43.37 points, or 3 percent, to 1,360.68, and the technology-laden Nasdaq composite index declined 75.38 points, or 2.96 percent, to 2,474.56. Shares opened lower after the government reported that the unemployment rate in May had its highest monthly increase in 22 years. But the decline accelerated as investors confronted a $10.75 jump in the price of crude oil, the biggest one-day climb ever.
“Oil prices have reached the tipping point,” said Richard Sparks, an analyst at Schaeffer’s Investment Research. “Prices have rallied for a good two months but now it’s really weighing on the market.”
(…)
Oil prices surged almost 8 percent, to $138.54 a barrel after a senior Israeli politician raised the specter of an attack on Iran and the dollar fell against the euro.
“As soon as that news hit the tape, oil spiked about $6,” said David Kovacs, an investment strategist at Turner Investment Partners.
Prices were buoyed further by a report from Morgan Stanley that predicted oil would reach $150 a barrel by July 4 because of higher demand in Asia. Shares of General Motors, whose fortunes can depend on oil prices, fell more than 4 percent, to a record low.
Politically, I can’t see how this is anything but bad news for McCain.
