Oil drops $7 to $139; Intel profits surge 25%

CBS

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Wall Street will see if oil prices have further to fall crude slid $7 Tuesday to under $139 a barrel it was the biggest one- day drop in 17 years but that wasn't enough to keep the blue chips out of the red after another wild trading day on Wall Street the Dow lost 92 points the NASDAQ eak out a three-point gain strong earnings news from Intel could help prop up the tech sector today after Tuesday's closing bell the computer chip maker posted a 25% jump in profits to $1.6 billion investors will be looking for financial report cards from eBay and Delta Airlines along with economic reports on retail inflation and homebuilder confidence Federal Reserve chairman Ben banki returns to Capitol Hill to continue his midyear report on the economy testifying Tuesday the FED Chief said the fragile economy is facing numerous obstacles to recovery including a slumping stock market housing market and job market as well as rising inflation and finally good news for YouTube users the video sharing website will be allowed to mask the identity of individual users when it hands over records to Viacom the company is suing YouTube owner Google for a billion dollars accusing the site of building its business by willfully violating viacom's copyright on its shows that's your money watch be sure to log on to cbsnews.com for more business headlines at the New York Stock Exchange I'm Alexis christopherus

U.S. Economy In Turmoil

CBS

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everybody's talking about the economy it's now weighing heavily on the minds of millions of Americans a new CBS News New York Times poll shows that 67% of Americans believe the economy is getting worse while only 3% believe it's getting better early show National correspondent Jeff glor is at the New York Stock Exchange good morning Jeff hey Maggie good morning to you yeah it's an anxious day here on Wall Street once again the Dow is at its lowest level in more than 2 years the S&P at its lowest level since 2005 and this is not the only place there are issues if you want a piece of negative economic news take your pick there's new information on inflation showing the producer price index what companies pay for things like food and gas at the wholesale level it's rising at its fastest rate in 27 years that means if you're making a veggie omelette for breakfast you better savor every bite the eggs cost companies 11.6% more than last year here the vegetables 14.7 and those costs get passed on to you by the way that's not even counting if you drive to pick everything up gas prices up 26% in that same period I'm still in shock actually housing prices are down 15% and the economy has lost jobs for 6 months in a row we've been here since 4:30 in the morning have you oh Lord relax you idiots let's not again there was anger at an indac Bank in California as nervous customers hope to get their money out they swarmed the bank for the second day in a row I got a mortgage payment due car payments due how am I going to make those payments all of this a result of two sustained shocks still hitting our financial system the first is the housing crisis and the credit Crunch and the second of course are these record high oil prices that's really a congressional prerogative I really haven't on Capitol Hill Tuesday s rhetoric pepper Federal Reserve chairman Ben beran's testimony the economy has continued to expand but at a subdued Pace in the housing sector activity continues to weaken the outlook for the economy and thus for credit quality remains uncertain President Bush sounded more optimistic but even he expressed concern about the economy people are working it's not as good as we'd like the consensus among Economist seems to be that it'll be at least early next year before the situation improves so to tighten your seat belts and be prepared for a bit of a rough ride the price of crude oil actually dropped sharply yesterday and that's because investors are worried about decreased demand from us drivers Maggie CBS is Jeff glore thank you Jeff joining us now from Boston with some perspective on where things stand is Art Hogan Chief Market Analyst at jeffre and Company good morning art good morning Maggie well Jeff just mentioned some good news oil prices took a steep drop and yet the Dow closed at its lowest point Point since 2006 what do you why yesterday what finally came together to make that happen you know it's interesting you you you have to put that drop in oil in perspective if you can't we got up a size of $1 14727 so to get back to 136 seems like something we should be celebrating but in retrospect that's still up about 50% from where we were a year ago so clearly still a problem so what happened yesterday was for the first time in history we had the treasury SEC secretary the head of the uh fed and the head of the SEC test ifying in front of Congress and talking about just how bad things are and just what they think they need to do to make them better is there an opportunity here well there will be I don't think you need to rush back into this Market I think the the uh thought process that the second half of 09 is going to be better than the second half of 08 and the market tends to be about 6 months ahead of that so I think by the end of the year there's going to be some great buying opportunities but right now as we work our way through earning season I think it's very early to try to bottom fish some of these stocks so what do you say to investors just just hang tight I mean everybody scared to put their money in Banks now in the stock market well I I I would say to investors first of all indac is probably the the exception not the norm and and there will be a couple of other Regional banks that made some bad decisions but I think in general you know feel safe that the the market is had 11 you know bare markets and we've survived since the World War II we're going to get through this one as well and I would say that try to stay the course make sure your asset allocation model is what you thought it was at the beginning of the year and then look for some Bargains as you work your way into the the end of the year all right appreciate the pep talk art Hogan thank you so much