High Oil Prices Drag Down Stock Prices

by Darren

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Since oil prices effect basically everything else, it’s easy for investors to become depressed about the prospects for growth on Wall Street. Growth is the drug that fuels almost all stock purchases. People dream of how much money they’ll return on their investment if only the company they buy into can grow sales and earnings for years to come. But growth, and profitability, are being eroded by heavy duty and unrelenting transportation costs.

Companies are reluctant to raise prices for fear of sales declines

The real issue now is that companies are paying more for everything. Normally they would just pass those prices increases along to consumers. But clearly, unless all company executives are brain dead, they can see that consumers are themselves laboring under the specter of high prices.

Consumers with less money and higher fixed costs are just not good for most businesses. Investors are very careful these days about what sector they’re playing in, because the ones effected by tight credit and consumer’s lack of cash just can’t possibly grow enough for serious returns.

That doesn’t mean that all companies are hurting. Right now the Alternative energy sector is worth looking at, and many investors are looking at alternative investments of all sorts in order to make sure they weather the current U.S. economic news.

Everything appears to hinge on oil prices right now, especially in the realm of investor sentiment. A gloomy mood from speculators today never cheered up as everyone poured over the mostly negative information concerning price increases.

At this rate, oil prices should remain key for the remainder of the Summer.

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