Stocks fall, oil rises as Egypt's turmoil roils markets

Crude oil nearly hits $100 a barrel in New York as Egypt's political standoff gets more dangerous. Stocks tumble, despite strong June auto sales.

By Charley Blaine Jul 2, 2013 7:19PM 3:45 a.m. ET, Wednesday

Stocks surged Tuesday for a second day in a row in the morning but faded in the afternoon -- as a potentially larger story emerged that may hit stocks Wednesday: rising oil prices.

Light sweet crude oil (-CL) nearly hit $100 in New York on Tuesday as turmoil grew in Egypt. How that story plays out may affect global markets over the next few days. Light sweet crude was trading at $101 a barrel early Wednesday, and stock markets around the world were mostly lower.

The irony of the gains for crude in New York -- as well as Brent crude in London -- is that those price increases have come as U.S. pump prices have fallen for the last 20 days in a row. The big question is if the declines will continue. A sudden and steep increase in pump prices will hurt consumers both financially and psychologically.

The  result of the TV pictures of millions protesting in Cairo. as a power struggle between Egyptian president Mohammed Morsi and the Egyptian army worsened. was to gut a decent U.S. stock market rally. Stocks did rebound a bit from afternoon lows.

The Dow Jones industrials ($INDU) had been been up as many as 140 points but closed down 43 points. The loss could have been worse. The Dow was down as many as 104 points around 2:35 p.m. ET.

The Standard & Poor's 500 Index ($INX) fell 1 point to 1,614. But the ride to that level included a gain of as many as 18 points and a swing to a decline of 8 points.

The Nasdaq Composite Index ($COMPX) was off 1 point as well, after seeing a 20-point gain slide briefly to a 19-point loss. 

Futures trading early Wednesday signaled a weak open ahead for stocks.

Tuesday's gyrations were due to the worry about Egypt -- and then hope things might turn out all right. In addition, there was terrific news on auto sales. Automakers had their best month in some six years, with June sales hitting an annualized sales rate of 16 million units. Growth in pickup sales was a big reason for the sales gains.

Light sweet crude oil in New York settled at $99.60 a barrel, up $1.61 from Monday and up $3.04 a barrel this week. It moved higher in electronic trading later in the day and is up more than 4% this week alone.

Brent crude, which has a outsized influenced on U.S. retail gasoline prices, added $1 to $104 a gallon. Brent was at $104.75 a barrel in early Wednesday trading -- a gain of 2.5% this week.

Despite those increases, there's been that decline in gasoline prices. According to AAA's Daily Fuel Gauge Report, the average price of regular unleaded gas has fallen from $3.632 a gallon on June 13 to $3.478 on Tuesday, a decline of 15.4 cents, or 4.2%.

The decline has been big enough that only Hawaiian and Alaskan drivers are dealing with prices above $4 a gallon and may be a strong reason that consumer confidence has been rising recently.

But that confidence may become damaged by the rising tensions in Egypt between Morsi and his Islamist supporters, and young people and the army. The army demanded Morsi patch relations with his opponents by Wednesday --  or the army would impose its own resolution. Late Tuesday, Morsi defiantly refused to resign.

The risk of Egypt is not its production, which is relatively small. A big risk is what happens if the Suez Canal shuts down, disrupting some shipments to Europe. And an even bigger risk is if the turmoil in Egypt affects oil production elsewhere in the Middle East.

Here in the U.S., we will find out just how big oil reserves are elsewhere, particularly from all those shale deposits that have been boosting U.S. oil production in the last few years after years of decline.

The growth in crude production is driving the biggest drop in crude imports in two decades. Another casualty: Rates for the oil tankers most reliant on the shipments are the weakest at least 16 years, Seeking Alpha noted today.

Should pump prices start to move higher and stay higher for an extended period of time, you could see those nice auto sales get hurt.

Stocks, meanwhile, we face what in theory should be a quiet day on Wednesday -- because markets close at 1 p.m. ET. Volume already has moved lower as Wall Street heads to the beach or the mountains for an extended holiday weekend.

But Egypt and a resumption of worries about political turmoil in Portugal that could upset austerity plans weighed on markets early Wednesday.

There are economic reports due Wednesday that could also move markets:
  • The ADP National Employment Index, which tracks private employment trends.
  • The monthly report on big layoffs from Challenger Gray Christmas
  • The Institute for Supply Management's monthly report on the non-manufacturing report.
All will shape how Wall Street views Friday's big jobs report. The consensus estimate has been for a gain of 160,000 payroll jobs and an unemployment rate at 7.5%. Bright Media, which runs the website, is estimating a gain of 172,000, down slightly from the government's first May estimate of 175,000 jobs created.

Twelve of the 30 Dow stocks were higher, along with 204 stocks in the S&P 500 and 40 stocks in the Nasdaq-100 Index ($NDX). The index finished up 2 points to 2,930. Apple (AAPL) helped, rising $9.27 to $418.49.

More on Top Stocks
Jul 2, 2013 8:09PM
Gas prices come down a few cents at a time long after the price per barrel has come down. The cost per barrel goes up a few dollars and look for a fifty cent one day increase.
Jul 2, 2013 9:04PM
Price at the pump jumped .05 cents this afternoon in upstate N.Y. It took over 6 weeks to go from 3.55 to 3.50. Just a few hours to jump again, damn thieves!
Jul 2, 2013 7:55PM
What tv pictures? The lamestreet media doesn't tell us about those types of stories. It's about Kim K. or Beiber fever, or whatever the hell it's called.
Jul 2, 2013 8:43PM
Prices rose because they always do before July 4th.  The reason is greed.
Jul 2, 2013 8:05PM
Egypt's' Turmoil, caused by none other than the commie 'n chief that liberal vermin  that we as a nation are cursed with, barrack hussein osama obama, and that hideous decrepit witch Hillary! man, what did this country do to deserve this nightmare, how stupid does a society have to be to vote these outright blithering idiots that have absolutely no idea what the hell they doing, or just don't care, well you idiots that voted for this, you're gonna get everything you deserve, may you know nothing but absolute financial despair for what you've done, enjoy the next 3 nightmarish years of your doing.
Jul 2, 2013 9:59PM
This has been Wall Street's ultimate goal for some time to push oil prices back over $100 a barrel. Greed and Manipulation are responsible for the current price of oil, not basic fundamentals such as supply and demand. The Middle East risk has already been built into the price of oil over and over again, so this raise is totally unjustified. Wake up Washington and force these clowns to take delivery of the product that they are buying. Keep up the good work Wall Street and maybe this time, you can put our country into a depression. What a bunch of Greedy Bastards.
Jul 2, 2013 9:16PM
You think the WAY UP every morning to a fall off in the afternoon has more to do with Big Money and very few remaining players in the markets vs. the Reality that we never left the Great Depression II? You can't print a recovery, especially with the huge number of greedy people destroying every chance of it.
Hmmm.... recently, the same webpage stated that the US was producing more oil than it was importing.  IF that is true, why is the cost of that oil being dictated by countries that can't behave?
Jul 2, 2013 9:25PM

Any excuse even if one of the princes gets a cold to raise oil prices...

Since oil changes everything and it is controlled by thieves we  either take control of it and stabilize the price or suffer longer.

Jul 2, 2013 9:54PM

Egypt is having problems....does that mean all of a sudden all the other nations start needing more oil? Yes I know it is a global situation...oil........but maybe.....the time will come that oil is not that big of a deal?.......I may be dead but would love to see the young Americans kick this opec out of their sandbags.

Jul 2, 2013 11:11PM
Its all a sham to screw the consumer. They troll the news all over the world daily with the internet looking for reasons to keep it above $3.00. Just anything they can find.
Jul 3, 2013 1:54AM
Finally, I can see after reading these comments that the people are getting the drift about just where all this corruption is coming from, as for one, oil per barrel. Yes, they have always blamed the other countries for the price going up, bull-sh...t! It has all along been the greed of wall street and anyone who has a large amount of stock in oil, that has been doing this to us, are there still any fools out there who believe otherwise, if so, you are brainwashed or you too are well off and have stock in oil!! Of course, Washington is not going to do anything about it, why should they? Hey, if I made the money they do, what the hell would I care if gas was $5.00 a gal. or even more? Small pocket change for them!! So, since power is in numbers, we, the less fortunate people who do not make the large amounts are the ones who will pay up. Simple math, when it goes up 5cents a gallon, multiply that by  the millions of people that each day fill up their tanks and see just how much they made in a single day. That is why the jump is great and the downswing takes weeks, if not months, to go back down to the original price. Gee, not too mention, we now have another hurricane forming, hmm, I wonder how much it will now go up tomorrow on Wall Street, as they anticipate, should I say, the worse,lol. This is all just a big joke and if this joke continues, our country has still not seen the worse and sad to say, that is just around the corner now! And just how are the car industries saying that cars are booming? Sure, they are now giving what, up to like 6-7 yrs. to pay for one? Sad!! Then, they say that these cars get better gas milage? Oh sure, well, if cars use less gas, then what? The price of oil again goes up to make up for what these idiots are losing!! Gee, is making a Million a year not enough to live anymore? My god, if only we could make these idiots live on what we, the majority make a year, for one year, that would be priceless!!! As for our own fuel, what does anyone think would happen if we had enough here in our own country to go around? Again, they still have to make up for their losses, so, we still would pay high prices at the pump. It is really a no win situation right now, until all the people get together and say....That is Enough!!!!!
Jul 3, 2013 12:41AM
How the hell does that country have anything to do with oil prices. They produce zero oil. If Holder had any back bone he would go after they people for price fixing. But you know that is not going to happen as Obama likes high gas so no one drives and he looks like a hero for his global warming friends.
Jul 3, 2013 4:12AM
You're an IDIOT.  Always someone else to blame for our OWN PROBLEMS.
Jul 2, 2013 9:33PM
ObaMorsi is the Cult see!
Jul 3, 2013 5:05AM
If we are exporting oil why would anything affect the US? Abolish OPEC. Or better yet take the US out of OPEC.
Jul 3, 2013 7:01AM
in case nobody  knows the object here is to take ever cent the middle class has  and  and  make you reliable  for the government  for your  needs. socialism  at its  best   there will be only  rich  and  poor this is being done  as we speak  the scary  part is  the people i talk to  say  there is nothing we  can  do   about  it.  well we can vote  that is still a powerful  weapon  but  if  we sit  back  and  say  nothing  or don't  call senators  and get out and  vote  then we deserve  what we  get
Jul 2, 2013 9:31PM
What damn fools we are are to be the slaves of Money and it's disciples. The dam suez will not close and more oil will be pumped and prices will continue to rise and rise and rise cause that's what economies do and you damn fools, yes you and me can do NOTHING about it, NOTHING. I wonder if there was turmoil here in America, would the price of oil rise in England or Africa or Norway or Iraq......RIGHT
Jul 3, 2013 6:35AM

It's CORRUPTION AND GREED by people who know you can't do anything about it. It will not change because politicians are getting RICH so therefore to them there is no problem. They don't even pay for their own gas so what the hell do they care.  People in this country losing time from work due to government sequester while we give our money away to other countries.


This is the kind of government you expect to help the AMERICAN people. All they are worried about is our tax dollars.

Jul 3, 2013 7:01AM
If the market were a person it would have been institutionalized a long time ago as an incurable paranoid!
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