The Dow Jones Industrial Average (INDEX: ^DJI ) dropped for the second day in a row, as global fears and high oil prices create skepticism about the underlying foundations of the recovery.
While the Dow has jumped 6.78% since the beginning of the year, the pace of growth for this bellwether index has slowed significantly in March. Only 0.73% of the Dow's climb has occurred during this month.
Investors might be tired of hearing about Europe's troubles, but that doesn't mean the painful process of rescuing Greece isn't relevant to the global economy. The markets are obviously showing some hesitancy about the strength of the overall recovery, and many economists have expressed concern as well.
Just last week, The Atlantic hosted an economic summit, inviting some of the brightest minds in this field to discuss the recovery and the global outlook. While most expressed optimism about the economy, very few would step out on a limb. Former Treasury Secretary Larry Summers stated that "an absolute declaration" on the sustainability of the recovery was out of his purview. Instead, he noted that he has greater confidence now than in the recent past.
In general, "cautious optimism" prevails right now. Even if Europe sorts out its situation with Greece, another threat is ever-present as energy prices continue to climb. HSBC (NYSE: HSB ) Chief Economist Stephen King noted that as Greece disappears from the headlines, "investors have quickly found a new source of anxiety thanks to the recent surge in oil prices."
So is this a case of the media hyping one potential threat after another, or should investors really fear the markets?
From my perspective, most indicators point to a slow but steady recovery, and oil prices could be a red herring. Energy costs can hurt GDP growth, but we are better prepared than we were a few years back. Since 2006, just before oil prices spiked, consumer demand for gasoline has fallen 10% on a per capita basis. As Fellow Fool Morgan Housel recently noted, U.S. consumers were lucky to have an incredibly mild winter, saving on heating costs across the country. Further, consumers are less burdened by household debt, which shrank from 14% of disposable income in 2007 to 11% today.
The media might see energy prices as a glass half-empty, but I know plenty of Fools bullish on the energy sector itself. Companies such as ExxonMobil (NYSE: XOM ) and Chesapeake Energy (NYSE: CHK ) have repositioned their reserves over the past few years to take advantage of new opportunities.
In Exxon's case, that's taking a conservatively run oil company and moving into natural gas, looking for growth because of limited opportunities in oil exploration around the world. On the flipside, Chesapeake has shown that it can turn an all-out bet on natural gas into a more balanced approach, tapping into natural gas liquids and oil through highly valuable land acquisitions.
For those interested in the fascinating energy market, look into companies with strong management and efficient operations. Some of the top Motley Fool analysts have identified their favorite opportunities in the special free report, "3 Stocks for $100 Oil." Take a look now, as it's available for only a limited time.