Oil Slides as Stocks Post a Mixed Showing
06/10/08 - 02:13 PM EDT
Sarina Penn
"The trade deficit heightens the risk of recession and surging unemployment," wrote Peter Morici, a business professor with the University of Maryland and former chief economist at the U.S. International Trade Commission. "Ben Bernanke's most recent comments about oil-driven inflation only serve to distract attention from these issues and aggravate risks."
"Bernanke in recent comments has emphasized that western central banks stand ready to resist oil-induced recession, when in fact oil price increases are far beyond the control of the Federal Reserve and other central banks to affect," Morici continued. He added that the Fed chief's words "cause markets to believe the Fed will raise interest rates as we travel into a recession and this drives equity prices down, compounding the panic created by rising oil prices." Gold futures slid $23.50 to $871.20 an ounce. Following Bernanke's observations, the U.S. dollar was advancing 1.2% against the euro and the yen. The greenback also jumped by more than a percent against the British pound and barreled 1.6% higher against the Swiss franc. Foreign markets were uniformly lower, and one of the hardest hit was China's CSI 300, which plummeted 8.1%. The Nikkei 225 in Tokyo dropped 1.1% overnight, and the Hang Seng Index in Hong Kong sank 4.2%. Among European exchanges, London's FTSE 100, Germany's Xetra Dax and the Paris Cac were all down 0.7% or more. On the U.S. corporate front, chipmaker Texas Instruments (TXN Quote - Cramer on TXN - Stock Picks) narrowed its second-quarter outlook, partially citing weak demand for handheld devices. Shares were falling 2.1%.
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