Middle East Troubles Mean No Rest for the Market

Yesterday, investors were denied the luxury of easing back from the long holiday weekend because of rising concerns over the rising violence in the Middle East. Returning from an extra-long holiday weekend, I'm facing the same challenge today.

Clearly, the escalating violence in the Middle East and corresponding spike in crude prices is causing unease on Wall Street. The developments in the Middle East threaten to undermine President Bush's war on terrorism, as The Wall Street Journal observed this morning. Since Bush has said battling terrorism is the main focus of his presidency, it's not a stretch to say setbacks on that front could threaten his entire agenda.

On a less political note, energy prices remain a key determinant to both inflation and consumer spending and confidence. At midday, crude futures were up 4% and pushing toward the $28-per-barrel level. In reaction, stock proxies moved solidly lower, although they had rebounded from early weakness by midday. ...