As oil powers upward, stocks end day lower

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NEW YORK - Wall Street sank Monday as oil’s surge above $108 a barrel and more worrisome signs for the financial sector led investors to extend last week’s losses. The Dow Jones industrial average fell more than 150 points, bringing its three-day loss to nearly 515, while broader indexes showed steeper percentage losses.

Wall Street had no bleak economic data to contend with Monday, but instead faced a steady drumbeat of negative news on companies exposed to mortgages.

Mortgage lenders dropped after Thornburg Mortgage Inc. was downgraded by a Jefferies & Co. analyst and Countrywide Financial Corp. was reported to be under investigation by the government for securities fraud.

Then, Bear Stearns Cos. dropped as Moody’s Investors Service downgraded a batch of Bear securities backed by Alt-A mortgages, which are home loans given to people lacking proof of income or with minor credit problems.

The slew of downbeat financial news overshadowed a strong February sales report from McDonald’s Corp., and led restless investors to proceed cautiously ahead of big economic reports later in the week: Thursday’s report on retail sales and Friday’s report on consumer prices. Those two readings will give Wall Street a better idea of how much the average American is struggling with falling home values and rising costs, and how aggressively the Federal Reserve will need to act when it meets next week.

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Is the rising price of oil truly the common denominator for the lack of success in the stock market? Companies costs of production are jumping as the the prices of oil rises and consumers have less money to spend if a larger portion of it is going to gasoline. The rising prises of oil are hitting both sides of supply and demand - the lessening of a supply of goods as well as a decrease in demand. Lets take a company like McDonalds for example. McDonalds, for say, has to rise the price of everything on the menu $0.05 to accomodate for a rise in oil prices. On the other side, consumers are wondering where there $1.05 (after oil) went for a double cheesebuger. Much, if not all, went to their tanks. Companies, like McDonalds, are taking hits from the rising oil prices and the stocks are showing it.

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Oil Muscles Past Faltering U.S. Economy

There was a time when oil prices needed the backing of a strong U.S. economy to reach record levels, but oil prices hit all-time highs again Wednesday even as a recession looms.

Clearly, a strong economy is still necessary to keep oil prices high, but it seems the United States is no longer oil's main driver.

"The really strong economy is on the other side of the world," said Peter Tertzakian, chief energy economist at ARC Financial, a Calgary-based private equity firm.

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This article addresses the recent rise in the cost of a barrel of oil for the United States. According to the article, the US is losing its status as the "main driver" of the price of oil because of its weakening economy. This article also compares the anticipated growth of the United States's economy (1.8 percent) with that of the developing countries (an average of eight percent). This shows the staggering stagnancy that has developed in the US's economy. This article also compares the prices that United States's consumers are paying for gas with the prices others are paying. (The US price: $3. European price: $7. Chinese price: $2.65. Indonesian price: $1.82. Iranian cost: $0.42. Saudi Arabian cost:$0.45.) This comparison shows the amount of taxes the United States is paying for oil, and it also represents the severity of the inflation occurring in the United States.

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