Record oil prices & notes from the recent FED meeting slammed stocks hard. They've had the worst 2 days since Bear Stearns. Dow tumbled 227, decliners ahead of advancers about 5-2 (although not as bad as might be expected for a rough day) & NAZ was down 44. Oil is trying to prove that the sky is the limit. The new contract, for July, rose 4.77 to 133.73. Just a couple of months ago we were talking about 100, then 110 oil. The upward move helped MLPs which closed just above 300, a magic barrier for them even though they will be hurt if anything (i.e. lower traffic in the pipelines) by higher oil prices. The damage this will do to the economy is getting thru to investors. Just one measure of the damage, American Airlines (AMR) on June 15 will start charging $15 to check each bag loaded on a plane to help them pay for higher gas prices.
You want more glum news? The FED is looking at slow growth & higher unemployment for the rest of the year. The decision for the last rate cut was a close call for some members. More cuts do not appear to be in the cards, although the rates are already at very low levels. Financials got hammered. In addition to the usual worries, there is talk about write-offs on balance sheets which are not showing up in the income statement. The last 2 days have been brutal in the markets & the rest of the week could also be ugly!
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