Friday, March 4, 2011

HIgher oil prices push stock prices lower

Dow fell 88 (90 above its lows), decliners ahead of advancers 2-1 & NAZ dropped 14.  Bank stocks led the market lower & the Financial Index is 9 below its high 2 weeks ago.


Value 222.13 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   -2.97  (-1.3%)

The Alerian MLP Index fell 1+ to the 379s while the REIT index dropped 2 to 233. The chart below is for AMJ, a fund that tracks the Alerian MLP Index.   Junk bond funds sold off but Treasuries rose for the first time in 3 days after a gov report showed the economy added fewer jobs than expected & wage growth was flat in Feb.  The yield on the 10 year Treasury bond fell 8 basis points to 3.49%.

Treasury yields:

U.S. 3-month
U.S. 2-year
U.S. 10-year

JPMorgan Chase Capital XVI (AMJ)  --  3 months

stock chart

Oil prices hit a 29-month high after the gov reported the unemployment rate fell to 8.9% in Feb. Gold rose on mounting tensions in Libya that boosted the appeal of the precious metal as an investment haven.  Gold is just below its record highs reached this week & it will march higher.

CLJ11.NYM....Crude Oil Apr 11...104.40 ... ...Up 2.49 (2.4%)

GCH11.CMX...Gold Mar 11.......1,426.60 ...Up 10.60  (0.8%)

$$$Gold Super Cycle$$$  

Yesterday the average price for gas at the pump was $3.47, up about 40¢ YTD.  At $4,12, it will establish a new record.  There are all kinds of estimates about how big an increase in the price of gas is needed to reduce the GDP growth rate by 1%.  The price rise is becoming a huge problem for the economy!

State's Graph
Souce:  AAA

Record Gasoline Grips Europe While California Faces $4

Gasoline prices are setting records across Europe & exceeding $4 a gallon in California as crude oil prices keep climbing.  Households are cutting back on travel, cinema visits & groceries in the UK., where prices jumped to 130.68 pence per liter ($8.06 a gallon) yesterday. Prices set records in the Netherlands & Italy today. Brent oil’s rise as high as $119 has pushed fuel costs up & put the economic recovery at risk. The impact on consumer prices may push the European Central Bank to raise interest rates as soon as next month to discourage higher wages & head off the threat of an inflationary spiral.

Record Gasoline Grips Europe, California Faces $4 a Gallon

Buyers returned in the last hour of trading to limit the damage.  Or maybe sellers gave up to take an early weekend holiday.  The jobs report was pretty good although some were disappointed that good was not "good enough."  There is a fair amount of turmoil going on in the world, not good for stock markets which value predictability.  Dow is back to where it was one month ago.  Next week could be a tough week for stock markets.  But gold continues to glitter!!

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