Transcripts

Mideast Tensions Rock Wall Street

SUSIE GHARIB: Another brutal day of selling on Wall Street as violence in the Middle East intensified and oil prices soared to a new record high. The Dow tumbled 166 points and the NASDAQ fell 36. August crude futures surged, closing at $76.70 a barrel. Investors are worried that the turmoil in the Middle East could broaden and overshadow any positive corporate news. Erika Miller reports.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Today was another rough ride for stock investors, as escalating violence in the Middle East sent major market averages reeling. Traders are reporting a shift in sentiment on the floor of the New York Stock Exchange.

ARTHUR CASHIN, DIRECTOR, NYSE FLOOR OPERATIONS, UBS: You get a compounding effect. You know the old saw about the straw that broke the camel`s back -- well, you can keep piling trouble on the market, but after a while, the market`s going to break.

MILLER: Oil spiked to a new record high in New York, adding to the selling pressure on stocks. Light sweet crude settled at $76.70 a barrel, up $1.75. And some oil experts warn prices could head significantly higher. 1 FADEL GHEIT, OIL & GAS ANALYST, OPPENHEIMER & CO.: There is no speed limit on this highway, if you will. You could see $100 oil; we could see $110 oil. How high can oil go? Nobody really knows.

MILLER: Investors have also been bailing out of stocks on fears that second quarter earnings will be disappointing.

SCOTT WREN, SR. EQUITY STRATEGIST, AG EDWARDS: It has just kind of snowballed. Investor pessimism has been pretty high to begin with for quite a while, and when you start to see these earnings misses early in the season, like we do now, it`s the negativity. It`s just, let`s look for something to worry about.

MILLER: To a lesser degree, experts blame the sell-off on expectations Japan will lift interest rates tomorrow for the first time in six years. The fear for U.S. stock investors is that rising interest rates globally will lead to a worldwide economic slowdown. U.S. stocks have been in a downturn since early May and investors wonder if the 3.5-year-old bull market is ending. Near term, many strategists warn the pressures on stocks are likely to continue, but some still think the S&P 500 could gain almost 12 percent from here to close the year at 1,400.

WREN: We think that if we can get some clarity in the next month or two on inflation, on the Fed, I think the market can trade higher and we can hit that target by the end of the year.

MILLER: If he`s right, it would put the S&P 500 at its highest level since 2000. That may comfort investors, because today`s sell-off put the index back in negative territory for the year. Erika Miller, NIGHTLY BUSINESS REPORT, New York.