Global financial markets open this week still in shock from Friday's dramatic surge in oil prices and plunge in stock prices -- and facing new doubts about the U.S. consumer's ability to help spur a recovery in the struggling economy.
Asian stock markets were falling early today and the battered dollar continued to lose ground against other major currencies as investors braced for Wall Street's starting bell.
There was a bit of relief in energy prices: Crude oil futures slipped $1.14 a barrel to $137.40 in electronic trading Sunday evening in New York. But that was just a sliver of the $10.75-a-barrel jump Friday to an all-time high of $138.54.
And in another reminder of what unprecedented oil prices are doing to Americans' pocketbooks, AAA on Sunday said the nationwide average price of gasoline crept up to a record $4 a gallon -- a level California already had surpassed.
The latest tumult in energy prices and financial markets is likely to focus a harsher spotlight on this week's economic reports, including the number of contracts signed to buy existing homes in April, May consumer price inflation and the first June survey of consumer confidence.
"It shouldn't be a surprise that the economy is weak. The question now is whether it's accelerating to the downside," said Don Rissmiller, chief economist at investment research firm Strategas Research Partners in New York.
That was the message some investors took away Friday after the government reported a fifth straight month of job losses in May and a leap in the unemployment rate to 5.5% from 5% in April -- the biggest one-month jump in 22 years.
Robert Brusca, head of Fact and Opinion Economics in New York, said that although the rise in the jobless rate was blamed on an increase in teenage unemployment, "the fact is that unemployment -- for just about every category -- [was] up in May, just not as sharply as for teenagers."
On Wall Street, where stocks have rallied since mid-March on hopes that the economy would improve in the second half of the year, some investors quickly threw in the towel Friday, driving shares down sharply at the start of trading.
The losses were soon compounded by dire news from the commodities market, where crude prices rocketed after pulling back earlier in the week. The buying frenzy was fueled in part by brokerage Morgan Stanley's prediction that oil could hit $150 a barrel by July 4.
