Monday, June 16, 2008

Stocks Mostly Gain; Dow Lower

US equities took divergent paths on Monday, as the NASDAQ finished higher, the Dow lower, and the S&P 500 mostly unchanged.

Dow 12,269.08 -38.27; NASDAQ 2,474.78 +20.28; S&P 500 1,360.14 +0.11; NYSE Composite 9,087.88 +24.65

Once again, there was little in the way of real economic news to move markets and that was reflected in the sparse volume and slow pace of trade.

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Advancing issues outdid decliners by a healthy margin, 3743-2468. New lows continued to dominate new highs, however, 244-150.

This rather sluggish trading should continue through the end of the month at least, in advance of 2nd quarter earnings reports in the middle and latter part of July. There certainly aren't many bargain stocks - at least on a marginal valuation scale - prompting investors to sit and wait until some kind of catalyst offers some kind of direction to the market.

The Fed, which meets next week, is widely speculated to hold interest rates right where they are, with federal funds at 2%. That leaves Bernanke and Co. very little wiggle room to cut, though there's plenty of room to raise rates should inflation become more of a worry.

The good news is that inflation seems to be quite well contained for a change, but economic expansion is being put on hold, due mostly to high oil and gas prices.

Speaking of crude, it was up early, but actually finished 13 cents lower, at $135.34. Reports are circulating far and wide that Saudi Arabia, the world's largest producer of crude oil, intends to increase output by 200,000 barrels a day, in a move that ostensibly would do away with runaway, rampant price hikes seen of late.

Gold finished sharply higher, at $886.30, up $13.20. Silver also followed suit, gaining 67 cents to $17.23. Both metals are still in a trading range well off their highs, set earlier this year. Should oil prices become more contained, a strengthened dollar and renewed economic expansion in the US could defuse the long-run metals and wider commodity rallies. Some relief from high commodity prices would be a welcome relief for both goods producers and consumers alike.

With the credit markets still in a state of near-siezure, stable to lower prices would be a very good sign that the "recession" or slowdown would be nearing a bottom. The truth is that we may have entered a real recession in December of '07, and the end could easily be marked about the time of the presidential elections at the start of November.

Wishful thinking for a better tomorrow.

NYSE Volume 1,163,712,000
NASDAQ Volume 1,862,187,000

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