The spike in energy prices comes as the Labor Department said the nation's unemployment rate jumped to 5.5 percent in May from 5.0 percent in April. It was the biggest monthly increase since February 1986 and the rise leaves unemployment at it highest level since October 2004. Wall Street had predicted an uptick to 5.1 percent.

The number of U.S. jobs shrank by a smaller-than-expected 49,000, but that development offered Wall Street little solace given that May marked the fifth straight month of jobs losses. Signs that the U.S. job market is deteriorating more than anticipated could thwart investors' hopes that the economy is poised for recovery later this year. That notion has helped propel the stock market from its mid-March lows.

The sudden rise in oil prices appeared to weigh most heavily on Wall Street, however, as some investors attributed a portion of the rise in unemployment to a rush of teenagers looking for summer work."  Or in reality, are all the layoffs in the building, travel and financial sectors coming home to roost?

The AP report quoted Ethan Harris, Lehman Brothers' chief U.S. economist, who contends that the employment report helped drive oil prices higher. He reportedly said traders are worried that the spike in unemployment would leave the Federal Reserve unwilling to raise interest rates.

The thought of a Fed with few options combined with comments from the European Central Bank this week on the possibility of raising rates have hurt the dollar, and of course that can cause commodities to spike.

"The weaker dollar is pushing up oil prices because oil is denominated in dollars and oil sellers want to be compensated for the weaker dollar," Harris said, adding that he thinks the market's moves have been overdone.

"While I'm skeptical of the whole thing in terms of whether it makes sense logically, this is the way the market behaves. It's like a Pavlovian response. If the Fed looks soft, oil prices go up," he said.

"I think the biggest concern right now is oil and it's potential for a stagflationary environment," said Bill Knapp, investment strategist for MainStay Investments, a division of New York Life Investment Management. Stagflation occurs when stalling growth accompanies rising prices.

Puru Saxena in Hong Kong shared an important concept this morning, "One thing is for sure - unless a policy recession is engineered by the central banks (via higher interest rates), the price of energy and food is going to stay high.  Our world's demand for both food and energy is rising and supplies are extremely tight.  In other words, we can kiss cheap food and energy good bye."

Mr.