Oil Price Up; Market Down
ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
On Wall Street, this was the kind of day that stock traders would probably like to forget. The Dow Industrials lost more than 350 points - that's about three percent of their value - to close at its lowest level in more than a year and a half.
Among the big losers was General Motors, which fell to a low that the company hasn't seen in 50 years. There was bad news just about everywhere you looked. NPR's Jim Zarroli joins me now, and Jim, before we get to the stock market, first, something related. I want you to tell us what happened with oil today.
JIM ZARROLI: Well, it doesn't take very much to send oil prices up these days. They just keep climbing. What appears to have been the cause today were some remarks from the president of OPEC. He basically said that oil prices could go to anywhere from $150 to $170 a barrel this summer.
When somebody like that in a position like that says something like that, it's kind of a self-fulfilling prophecy because investors rush in and start buying up futures contracts. Prices go up.
Also, Libya is making some noises about cutting oil production. So oil rose about $5 a barrel, and that was really one of the big factors affecting stocks today.
SIEGEL: Well now, that three-percent drop in the Dow, was the sell-off in the stock market very broad-based? Did the other industries go down that much?
ZARROLI: Oh yeah, this was a meltdown. Every one of the 30 stocks in the Dow lost ground. The Dow is now down nearly 19 percent off its high in October, 2006. You have the Standard & Poor's 500 Index falling below 1,300. That's considered an important milestone for stock traders.
You know, yesterday, the Federal Reserve issued a statement saying that the downside risks to the economy have diminished. In other words, things don't look as bad as they were, but once again, the stock market is sort of going off in a different direction. There's still a lot of anxiety that resurfaces on a regular basis, and it did so today.
SIEGEL: Well, but if the market isn't responding to the Fed, that would be presumably a jump up if they responded to the Fed, what are the reasons for this decline?
ZARROLI: Well, a lot of it is just, you know, the same old stuff we've seen, oil prices going up, dollar falling. You had more troubles in the financial sector today. You had an analyst coming out and saying that Citigroup and Merrill Lynch are likely to face bigger losses than people thought in the second quarter.
We're really just a year into this credit crisis, and we're still trying to figure out the real impact of the sub-prime mortgage crisis on banks. And then finally, General Motors got downgraded, as you noted. All of the U.S. oil companies are getting battered by gasoline costs.
Today you had an analyst saying that General Motors might have to cut its dividends. Shareholders don't really need another reason to run away from General Motors, but I think they found one today.
SIEGEL: Jim, are there any signs that the economy might be beginning to turn around, and this could be the bottom of the problem?
ZARROLI: You know, we had a revision on the first-quarter economic growth numbers today. There were some positive signs. Exports are up a lot because of the weak dollar. There are also some omens. You had two major technology companies, Oracle and Research in Motion, both saying their profits weren't going to grow as fast as they expected. You had a truck company, Oshkosh, saying their sales to Western Europe are lower than expected. And you know, we're hearing some rumbling that the European economy is slowing. That's obviously a big market for U.S. goods, and if that happens, that's another potential problem facing us.
SIEGEL: Okay, thank you, Jim.
ZARROLI: You're welcome.
SIEGEL: That's NPR's Jim Zarroli in New York