Last week, as the the wealthy and infamous gathered for the annual World Economic Forum (WEF) in Davos, Switzerland, markets were focusing on more compelling domestic and international issues, primarily, the impeachment trial of President Donald J. Trump and the outbreak of the deadly coronavirus which has spread outward from its source in mainland China, now reaching around the world, particularly in the Northern Hemisphere, where nearly all the developed nations are anchored.
While the impeachment hearings were less impactful, being that the first few days of the trial consisted of one session for rule-making and three days of Democrat managers from the House of Representatives reiterating their tired claims from months of investigations stemming from a single phone call, the spread of a killer virus caught everybody's attention.
The number of deaths officially reported by the Chinese government grew from 16 on Wednesday to 23 to 41 to 56 by Sunday. As the week progressed, the number of reported cases grew considerably - by Sunday, nearly 2,000 in China alone - along with the number of countries discovering outbreaks. By Sunday morning, instances of reported cases had been registered in France, South Korea, Japan, Nepal, Thailand, Singapore, Vietnam, Taiwan, Australia, and the United States.
Similar to the SARS (severe acute respiratory syndrome) outbreak, which killed more than 750 people in 2002-2003, the threat is that this particular virus is spreading at a much faster rate as transmissibility is increasing.
By Monday morning, the toll will likely exceed 90, but there's widespread speculation that China has been and continues to understate not only the number of cases reported, but also the death toll.
This is the kind of thing some students of the dark science of economics might consider a "black swan," an unusual event or occurrence with a low probability that nobody sees coming. Already, the coronavirus outbreak has affected markets, but none more profoundly than oil. With travel bans in effect already in some Chinese cities and many presumably taking precautions to avoid crowds and people who may be infected, the world's second-largest user of oil and distillates is bound to experience a sharp demand decline that will affect prices globally.
WTI crude fell, over the course of the week, from $58.58 per barrel to $54.19, a decline of 7.5%. Brent dropped from an opening at $65.65 on Monday to $59.85 by week's end, losing nearly nine percent.
Stocks were also hit, as increasingly dire stories continued to mount over the course of the week, limiting upside on all exchanges, and squelching rallies on Tuesday, and especially in the US on Friday, when the Chinese government announced the rising death toll and cancellation of many Lunar New Year festivities, the biggest holiday in the country.
China, already on the brink of an extended financial downturn, saw severe damage to equity markets.
If the coronavirus continues to spread to other countries and becomes a pandemic, declines on the major indices (the Dow was down for the fourth straight day as of Friday) could turn what appeared as a minor fluctuation into an avalanche. Limiting movement, be it out of fear or by government dictates, would seriously hamper economic activity anyway, and, if the contagion becomes global in nature, which it appears to be doing, the effect may be long-lasting.
So, that's how normal operating markets turn into dungeons of doom. There is no silver lining, other than, you guessed it, silver and gold, both of which turned in the opposite direction from stocks, both tumbling on Tuesday but gaining the remainder of the week. Gold finished at $1571.60 per ounce; silver closed out the week at $18.10 per ounce. There is likely to be a further, faster advance in precious metals should the virus continue to spread.
With an FOMC meeting up next week (January 28-29) bonds saw high demand, moving interest rates on treasuries to their lowest levels since October, 2019. The 10-year-note closed out the week at 1.70% yield, with the 30-year bond closing at 2.14%.
Also upcoming in the week ahead, a slew of earnings reports, many of them notable as most will be for the fourth quarter of 2019 and the full year.
On Monday, homebuilder D.R. Horton (DHI) and telecom Sprint (S) get the earnings parade started. A loaded Tuesday has Lockheed Martin (LMT), 3M (MMM), Phizer (PFE), United Technologies (UTX), Nucor (NUE), and PulteGroup (PHM). Apple (APPL) and eBay (EBAY) report after the close.
On Wednesday, Dow components Boeing (BA), AT&T (T), and McDonald's (MCD) present, along with Mastercard (MA), General Electric (GE), and Dow Chemical (DOW). Tesla (TSLA), Microsoft (MSFT), Facebook (F), and PayPal (PYPL) report after the close. Thursday's offerings include some titans. Coca-Cola (K), UPS (UPS), and Verizon (VZ) report prior to the opening bell. Amazon (AMZN) and Visa (V) are up after the close.
Prior to Friday's market open, ExxonMobil (XOM), Chevron (CVX), and Caterpillar (CAT) close out the earnings deluge.
It's going to be a busy week with plenty of engaging, diverging stories. In case that's not enough, the impeachment trial could conceivably wrap up by Friday, possibly sooner, the Super Bowl is Sunday, February 2nd, and the first presidential primary, the Iowa caucus, convenes on Monday, February 3rd.
If the coronavirus continues to spread, it's not likely to slow down, so this coming week could be an opportunity to take profits and/or shed losers before markets get any ideas about tanking. Depending on how severe the virus becomes, how quickly and how far it spreads, appropriate defensive actions may be entertained.
With stocks close to all-time highs, there's hardly a case to be made for buying at this point, which, in itself may provide good enough reason for some spirited selling.
At the Close, Friday, January 24, 2020:
Dow Jones Industrial Average: 28,989.73, -170.36 (-0.58%)
NASDAQ: 9,314.91, -87.57 (-0.93%)
S&P 500: 3,295.47, -30.07 (-0.90%)
NYSE: 13,978.47, -123.57 (-0.88%)
For the Week:
Dow: -358.37 (-1.12%)
NASDAQ: -74.03 (-0.79%)
S&P 500: -343.15 (-1.03%)
NYSE: -123.57 (-0.8*%)
Showing posts with label ExxonMobil. Show all posts
Showing posts with label ExxonMobil. Show all posts
Sunday, January 26, 2020
Tuesday, November 13, 2018
Dow Down 100, NASDAQ Up 0.01; Crude Oil the Culprit
From the You Can't Make This Stuff Up Department:
The Dow was down 100 points (and 69 cents, but who's counting), while the NASDAQ finished a hectic day of trading with a gain of 0.01. All told, this was a losing session, as both the S&P 500 and NYSE Composite ended the day underwater.
One might have assumed that Tuesday's losses were an extension from Monday, with Apple leading stocks lower, but, even though the Cupertino computer colossus did finish lower by an even one percent, the biggest losers on the Dow were energy companies ExxonMobil and Chevron, which bracketed Boeing (BA), a 2.11% loser. XOM lost 2.29%. CVX was down 1.74%.
Volatility in stocks is making everybody crazy. The Dow was up 1075 points over the first six sessions in November, but has given back 905 in the past three sessions, leaving it up a mere 170 points for the month, one which traditionally is among the best for long players.
Thus, the answer to the question of what moved markets today is simple: the price of oil, as WTI crude lost ground for the 12th straight day. At $55.19, it's at the lowest level since November last year. Tuesday's decline was also the largest during the recent rout, down nearly eight percent.
Saudi Arabia reduced its estimate for global demand from two million barrels per day to 1.29 million, sending the price sharply lower. Oil peaked on October 3rd, above $76/barrel, and has been on a diagonal course lower since, now officially in a bear market.
While the Saudi's may be fretting over demand and promising production cuts in the near future, the real villain in the oil patch is supply. There's been a glut of oil forever, and the only movement in price was due to artificial crises, forced production cuts, and pure speculation. In June of 2017, WTI crude oil was going for $46/barrel, but was bumped up continuously over the next 16 months before the recent setback. From all indications, reduced demand and oversupply could push prices down below $50/barrel before Thanksgiving and further declines might be a welcome Christmas present for drivers and those who heat their homes with oil.
A lower price for oil, and, consequently, for gasoline and other derivatives, should act to boost the general economy, allowing consumers more disposable income to spend on necessities and/or holiday splurges, all of which should be positive for markets. However, the math isn't quite so simple, as Americans, beset with record credit card and other debt, might tighten their collective belts and pay down some of those nasty, recurring, monthly bills on credit cards with interest rates well beyond what used to be considered usury.
For the pair traders out there, that would mean shorting oil stocks and financials while buying consumer staples and cyclicals.
Fun for everyone.
Dow Jones Industrial Average November Scorecard:
At the Close, Tuesday, November 13, 2018:
Dow Jones Industrial Average: 25,286.49, -100.69 (-0.40%)
NASDAQ: 7,200.88, +0.01 (0.00%)
S&P 500: 2,722.18, -4.04 (-0.15%)
NYSE Composite: 12,328.23, -15.28 (-0.12%)
The Dow was down 100 points (and 69 cents, but who's counting), while the NASDAQ finished a hectic day of trading with a gain of 0.01. All told, this was a losing session, as both the S&P 500 and NYSE Composite ended the day underwater.
One might have assumed that Tuesday's losses were an extension from Monday, with Apple leading stocks lower, but, even though the Cupertino computer colossus did finish lower by an even one percent, the biggest losers on the Dow were energy companies ExxonMobil and Chevron, which bracketed Boeing (BA), a 2.11% loser. XOM lost 2.29%. CVX was down 1.74%.
Volatility in stocks is making everybody crazy. The Dow was up 1075 points over the first six sessions in November, but has given back 905 in the past three sessions, leaving it up a mere 170 points for the month, one which traditionally is among the best for long players.
Thus, the answer to the question of what moved markets today is simple: the price of oil, as WTI crude lost ground for the 12th straight day. At $55.19, it's at the lowest level since November last year. Tuesday's decline was also the largest during the recent rout, down nearly eight percent.
Saudi Arabia reduced its estimate for global demand from two million barrels per day to 1.29 million, sending the price sharply lower. Oil peaked on October 3rd, above $76/barrel, and has been on a diagonal course lower since, now officially in a bear market.
While the Saudi's may be fretting over demand and promising production cuts in the near future, the real villain in the oil patch is supply. There's been a glut of oil forever, and the only movement in price was due to artificial crises, forced production cuts, and pure speculation. In June of 2017, WTI crude oil was going for $46/barrel, but was bumped up continuously over the next 16 months before the recent setback. From all indications, reduced demand and oversupply could push prices down below $50/barrel before Thanksgiving and further declines might be a welcome Christmas present for drivers and those who heat their homes with oil.
A lower price for oil, and, consequently, for gasoline and other derivatives, should act to boost the general economy, allowing consumers more disposable income to spend on necessities and/or holiday splurges, all of which should be positive for markets. However, the math isn't quite so simple, as Americans, beset with record credit card and other debt, might tighten their collective belts and pay down some of those nasty, recurring, monthly bills on credit cards with interest rates well beyond what used to be considered usury.
For the pair traders out there, that would mean shorting oil stocks and financials while buying consumer staples and cyclicals.
Fun for everyone.
Dow Jones Industrial Average November Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 11/1/18 | 25,380.74 | +264.98 | +264.98 |
| 11/2/18 | 25,270.83 | -109.91 | +155.07 |
| 11/5/18 | 25,461.70 | +190.87 | +345.94 |
| 11/6/18 | 25,635.01 | +173.31 | +519.25 |
| 11/7/18 | 26,180.30 | +545.29 | +1064.54 |
| 11/8/18 | 26,191.22 | +10.92 | +1075.46 |
| 11/9/18 | 25,989.30 | -201.92 | +873.54 |
| 11/12/18 | 25,387.18 | -602.12 | +271.42 |
| 11/13/18 | 25,286.49 | -100.69 | +170.27 |
At the Close, Tuesday, November 13, 2018:
Dow Jones Industrial Average: 25,286.49, -100.69 (-0.40%)
NASDAQ: 7,200.88, +0.01 (0.00%)
S&P 500: 2,722.18, -4.04 (-0.15%)
NYSE Composite: 12,328.23, -15.28 (-0.12%)
Tuesday, September 25, 2018
Dow Losses Tied To Nothing Other Than Profit-Taking
There's almost no chance - as Yahoo! News blared in a headline late Monday afternoon - that Brett Kavenaugh's Supreme Court nomination had anything to do with the 181-point drop on the Dow.
The continuing false narrative foisted by the financial media is about as fake as fake news can get. Every day, there has to be a reason for stocks rising or falling, there just has to be. Otherwise, how would the 24-hour squawking about stocks, finance, and your money justify its existence.
Sure enough, there are days that movements in stocks is correlated to some economic event, data drop, or newsworthy story, but most of the time trading actions are the result of some analysis, some emotion, and largely, some advance planning. Big firms don't just jump in and out of positions on the news of the day, their positions, and the allocation of their capital, is guided by profit and loss, gauging risk and reward, greed and fear.
There are times in which herd mentality takes over and swings sectors or even entire markets one way or the other, but, by and large, such huge swings are already programmed by the big trading firms, which almost never leave their positions vulnerable to unforeseen events. They are protected by covered calls or puts or any of a variety of risk-reducing strategies. Nobody with any experience trading stocks is rushing to their terminals to buy or sell on whatever nonsense is being cooked up by the crooks running the federal government in Washington, DC, because what happens on Capitol Hill usually has little to nothing to do with real capital being flung far and wide from Wall Street.
Firm in the knowledge that big positions were not being liquidated by major traders, what did cause the dip on the Dow Monday?
Chalk it up to profit-taking on short-term positions. Of the 30 Dow stocks, only seven were winners on the day, leaving 23 in the loss column. Two of the winner - ExxonMobil and Chevron - were tied almost directly to oil prices, which were up not just on the day, but for the past few weeks, as WTI crude hit a four-year high above $72/barrel on Monday. Three were chip or computer-related, as Apple, Microsoft and Intel were up, and the other two, Disney and United Health, were based on some perceived valuation play.
The rest of the stocks were lower, and it's probably a good idea to discount it as nothing more than random noise. The Dow just reached all-time highs this past Thursday and was even higher on Friday, so traders had plenty of time over the weekend to figure their positions, their profits, and how to take them. Since the move was less than one percent there's reason to believe that many traders - who, via groupthink, share many of the same strategies, knowledge, and objectives - saw an opportunity to book profits and move on to the next big thing, whatever that might be.
And, when they discover the next profitable trade, it's a safe bet that you won't be privy to it, but that many of the bigger traders on the street will know. It will have nothing to do with the news, politics, the soybean crop report, or the color of Lady Gaga's hair. You can bet on that.
Dow Jones Industrial Average September Scorecard:
At the Close, Monday, September 24, 2018:
Dow Jones Industrial Average: 26,562.05, -181.45 (-0.68%)
NASDAQ: 7,993.25, +6.29 (+0.08%)
S&P 500: 2,919.37, -10.30 (-0.35%)
NYSE Composite: 13,162.05, -74.39 (-0.56%)
The continuing false narrative foisted by the financial media is about as fake as fake news can get. Every day, there has to be a reason for stocks rising or falling, there just has to be. Otherwise, how would the 24-hour squawking about stocks, finance, and your money justify its existence.
Sure enough, there are days that movements in stocks is correlated to some economic event, data drop, or newsworthy story, but most of the time trading actions are the result of some analysis, some emotion, and largely, some advance planning. Big firms don't just jump in and out of positions on the news of the day, their positions, and the allocation of their capital, is guided by profit and loss, gauging risk and reward, greed and fear.
There are times in which herd mentality takes over and swings sectors or even entire markets one way or the other, but, by and large, such huge swings are already programmed by the big trading firms, which almost never leave their positions vulnerable to unforeseen events. They are protected by covered calls or puts or any of a variety of risk-reducing strategies. Nobody with any experience trading stocks is rushing to their terminals to buy or sell on whatever nonsense is being cooked up by the crooks running the federal government in Washington, DC, because what happens on Capitol Hill usually has little to nothing to do with real capital being flung far and wide from Wall Street.
Firm in the knowledge that big positions were not being liquidated by major traders, what did cause the dip on the Dow Monday?
Chalk it up to profit-taking on short-term positions. Of the 30 Dow stocks, only seven were winners on the day, leaving 23 in the loss column. Two of the winner - ExxonMobil and Chevron - were tied almost directly to oil prices, which were up not just on the day, but for the past few weeks, as WTI crude hit a four-year high above $72/barrel on Monday. Three were chip or computer-related, as Apple, Microsoft and Intel were up, and the other two, Disney and United Health, were based on some perceived valuation play.
The rest of the stocks were lower, and it's probably a good idea to discount it as nothing more than random noise. The Dow just reached all-time highs this past Thursday and was even higher on Friday, so traders had plenty of time over the weekend to figure their positions, their profits, and how to take them. Since the move was less than one percent there's reason to believe that many traders - who, via groupthink, share many of the same strategies, knowledge, and objectives - saw an opportunity to book profits and move on to the next big thing, whatever that might be.
And, when they discover the next profitable trade, it's a safe bet that you won't be privy to it, but that many of the bigger traders on the street will know. It will have nothing to do with the news, politics, the soybean crop report, or the color of Lady Gaga's hair. You can bet on that.
Dow Jones Industrial Average September Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 9/4/18 | 25,952.48 | -12.34 | -12.34 |
| 9/5/18 | 25,974.99 | +22.51 | +10.17 |
| 9/6/18 | 25,995.87 | +20.88 | +31.05 |
| 9/7/18 | 25,916.54 | -79.33 | -48.28 |
| 9/10/18 | 25,857.07 | -59.47 | -107.75 |
| 9/11/18 | 25,971.06 | +113.99 | +6.24 |
| 9/12/18 | 25,998.92 | +27.86 | +34.10 |
| 9/13/18 | 26,145.99 | +147.07 | +181.17 |
| 9/14/18 | 26,154.67 | +8.68 | +189.85 |
| 9/17/18 | 26,062.12 | -92.55 | +97.30 |
| 9/18/18 | 26,246.96 | +184.84 | +282.14 |
| 9/19/18 | 26,405.76 | +158.80 | +440.94 |
| 9/20/18 | 26,656.98 | +251.22 | +692.16 |
| 9/21/18 | 26,743.50 | +86.52 | +778.68 |
| 9/24/18 | 26,562.05 | -181.45 | +597.23 |
At the Close, Monday, September 24, 2018:
Dow Jones Industrial Average: 26,562.05, -181.45 (-0.68%)
NASDAQ: 7,993.25, +6.29 (+0.08%)
S&P 500: 2,919.37, -10.30 (-0.35%)
NYSE Composite: 13,162.05, -74.39 (-0.56%)
Friday, May 11, 2018
Dow Gains 6th Straight Session; Oil Rises; Yield Curve Flattens
With a gain of nearly 200 points, the Dow Jones Industrial Average posted its sixth straight winning day, adding 875 points over that span.
Leading the charge higher were Apple (AAPL), which reached a new all-time high, at 190.04, and ExxonMobil (XOM), which gained 1.79 to close the session at 81.72. ExxonMobil's rise was attributed largely to the soaring price of oil. At 71.43 per barrel of WTI crude, oil is at its highest in four years, causing pain at the pump for commuters and drivers, but profits galore for energy companies.
While the immediate market euphoria may be tied somewhat to the rally in crude, it is likely to be short-lived if higher gasoline prices persist, as consumers will likely cut demand for other retail products, having to spend more to fill their tanks.
Another worrisome sign is the flattening treasury yield curve. The difference in yield spread between the five-year note and the 30-year bond fell to its lowest since 2007, a mere 29 basis points, with the five at 2.83 and the 30 at 3.12.
Flattening the curve, as at present, tightens banks' ability to lend at profit and is often a sign of a nearby recession. Should the curve invert - with fives' yield higher than 10's perhaps, it's an almost certain sign of recession, as all recessions over the past 50 years have been presaged by an inverted curve.
Dow Jones Industrial Average May Scorecard:
At the Close, Thursday, May 10, 2018:
Dow Jones Industrial Average: 24,739.53, +196.99 (+0.80%)
NASDAQ: 7,404.97, +65.07 (+0.89%)
S&P 500: 2,723.07, +25.28 (+0.94%)
NYSE Composite: 12,731.64, +99.15 (+0.78%)
Leading the charge higher were Apple (AAPL), which reached a new all-time high, at 190.04, and ExxonMobil (XOM), which gained 1.79 to close the session at 81.72. ExxonMobil's rise was attributed largely to the soaring price of oil. At 71.43 per barrel of WTI crude, oil is at its highest in four years, causing pain at the pump for commuters and drivers, but profits galore for energy companies.
While the immediate market euphoria may be tied somewhat to the rally in crude, it is likely to be short-lived if higher gasoline prices persist, as consumers will likely cut demand for other retail products, having to spend more to fill their tanks.
Another worrisome sign is the flattening treasury yield curve. The difference in yield spread between the five-year note and the 30-year bond fell to its lowest since 2007, a mere 29 basis points, with the five at 2.83 and the 30 at 3.12.
Flattening the curve, as at present, tightens banks' ability to lend at profit and is often a sign of a nearby recession. Should the curve invert - with fives' yield higher than 10's perhaps, it's an almost certain sign of recession, as all recessions over the past 50 years have been presaged by an inverted curve.
Dow Jones Industrial Average May Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 5/1/18 | 24,099.05 | -64.10 | -64.10 |
| 5/2/18 | 23,924.98 | -174.07 | -238.17 |
| 5/3/18 | 23,930.15 | +5.17 | -233.00 |
| 5/4/18 | 24,262.51 | +332.36 | +99.36 |
| 5/7/18 | 24,357.32 | +94.81 | +194.17 |
| 5/8/18 | 24,360.21 | +2.89 | +197.06 |
| 5/9/18 | 24,542.54 | +182.33 | +379.39 |
| 5/10/18 | 24,739.53 | +196.99 | +576.38 |
At the Close, Thursday, May 10, 2018:
Dow Jones Industrial Average: 24,739.53, +196.99 (+0.80%)
NASDAQ: 7,404.97, +65.07 (+0.89%)
S&P 500: 2,723.07, +25.28 (+0.94%)
NYSE Composite: 12,731.64, +99.15 (+0.78%)
Monday, January 25, 2016
Gold, Silver Rise as Banks, Energy Stocks in Market Crosshairs
Being that the US equity markets are almost 100% likely to end the month with losses, the opening of the final week of January trading may have been significant if only for the direction of a select number of trading vehicles.
Obviously, energy stocks were once again in focus after last week's faux rally on actual inventory builds, though the pundits of oil slickery are blaming today's demise on the record weekend blizzard that decimated the Northeast.
As lame as it may sound, having the I-95 corridor out of commission for the better part of three to four days is certain to result in growth of the oil and distillate glut that has been plaguing the markets for the past 18 months. The logic is simple: if people aren't driving, nobody's buying gas, and that is exactly what the market doesn't want to hear, especially those of the camp who still believe in the peak oil myth and would like nothing better than to cripple the middle class with another round of crushing gas prices at the pump.
Sadly for them, no such thing is about to occur, and, after being goosed nearly 20% last week, WTI crude took a turn to the downside again, off almost 6% on the day, closing just a nod above $30 per barrel. With the canard of higher oil prices (last week was a serious short squeeze) out of the way, oil majors Exxon Mobil (XOM) and Chevron (CVX) - both Dow components - both declined by more than three percent.
Also taken down a few notches were banks, especially Bank of America (BAC), which closed below 13 at 12.96, a one-day four percent drop, now down a solid 30% from its recent 52-week high (18.48). Investors and specs are concerned not only with BAC's exposure to the oil patch and fracking concerns, which have been going belly-up since last Autumn, but with the overall health of the banking sector. Reminded that the nation's largest banks had to be bailed out during the sub-prime crisis just eight years ago, stock players don't need much to arouse their worst suspicions, that the balance sheets of the big money center banks are still not exactly transparent.
Citigroup (C) also was on the chopping block, losing 3.35%, extending its decline since May to a third of its value, from 60.95 to today's close at 39.55.
Meanwhile, gold and silver put on tidy gains, with gold edging up nearly $10, from $1098/oz. at Friday's close to a finish in US markets at $1107.90 today. Silver gained, from an even $14 to $14.23 on the day.
Overall, stocks were exposed again, with US indices staying in the red all day long, the selling accelerating during the afternoon and into the close. It was an inauspicious start to the week in a month that has been nothing short of embarrassing for Wall Street's perms-bulls.
Today's Closing Prices:
S&P 500: 1,877.08, -29.82 (1.56%)
Dow: 15,885.22, -208.29 (1.29%)
NASDAQ: 4,518.49, -72.69 (1.58%)
Crude Oil 30.33 -5.78% Gold 1,105.60 +0.85% EUR/USD 1.0849 +0.47% 10-Yr Bond 2.0220 -1.27% Corn 369.25 -0.27% Copper 1.99 -0.47% Silver 14.23 +1.23% Natural Gas 2.16 +0.84% Russell 2000 997.37 -2.28% VIX 24.15 +8.10% BATS 1000 19,941.58 -1.78% GBP/USD 1.4246 -0.19% USD/JPY 118.3035 -0.36%
Obviously, energy stocks were once again in focus after last week's faux rally on actual inventory builds, though the pundits of oil slickery are blaming today's demise on the record weekend blizzard that decimated the Northeast.
As lame as it may sound, having the I-95 corridor out of commission for the better part of three to four days is certain to result in growth of the oil and distillate glut that has been plaguing the markets for the past 18 months. The logic is simple: if people aren't driving, nobody's buying gas, and that is exactly what the market doesn't want to hear, especially those of the camp who still believe in the peak oil myth and would like nothing better than to cripple the middle class with another round of crushing gas prices at the pump.
Sadly for them, no such thing is about to occur, and, after being goosed nearly 20% last week, WTI crude took a turn to the downside again, off almost 6% on the day, closing just a nod above $30 per barrel. With the canard of higher oil prices (last week was a serious short squeeze) out of the way, oil majors Exxon Mobil (XOM) and Chevron (CVX) - both Dow components - both declined by more than three percent.
Also taken down a few notches were banks, especially Bank of America (BAC), which closed below 13 at 12.96, a one-day four percent drop, now down a solid 30% from its recent 52-week high (18.48). Investors and specs are concerned not only with BAC's exposure to the oil patch and fracking concerns, which have been going belly-up since last Autumn, but with the overall health of the banking sector. Reminded that the nation's largest banks had to be bailed out during the sub-prime crisis just eight years ago, stock players don't need much to arouse their worst suspicions, that the balance sheets of the big money center banks are still not exactly transparent.
Citigroup (C) also was on the chopping block, losing 3.35%, extending its decline since May to a third of its value, from 60.95 to today's close at 39.55.
Meanwhile, gold and silver put on tidy gains, with gold edging up nearly $10, from $1098/oz. at Friday's close to a finish in US markets at $1107.90 today. Silver gained, from an even $14 to $14.23 on the day.
Overall, stocks were exposed again, with US indices staying in the red all day long, the selling accelerating during the afternoon and into the close. It was an inauspicious start to the week in a month that has been nothing short of embarrassing for Wall Street's perms-bulls.
Today's Closing Prices:
S&P 500: 1,877.08, -29.82 (1.56%)
Dow: 15,885.22, -208.29 (1.29%)
NASDAQ: 4,518.49, -72.69 (1.58%)
Crude Oil 30.33 -5.78% Gold 1,105.60 +0.85% EUR/USD 1.0849 +0.47% 10-Yr Bond 2.0220 -1.27% Corn 369.25 -0.27% Copper 1.99 -0.47% Silver 14.23 +1.23% Natural Gas 2.16 +0.84% Russell 2000 997.37 -2.28% VIX 24.15 +8.10% BATS 1000 19,941.58 -1.78% GBP/USD 1.4246 -0.19% USD/JPY 118.3035 -0.36%
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