DIA -1.19%, SPY -.73%, QQQQ -1.12%
10-Year Treasury +10/32, yielding 3.92%
Oil + 42 cents to 59.84/bbl
Dollar -.6% versus Euro, +.1% versus Yen
The markets were hit for a second day by oil’s price nearing $60/bbl. Earlier this week, market commentators expressed concern about third quarter earnings coming in lower than expected. Rising energy prices exacerbated this condition. In addition, core durable goods came in lower than expected at -.2%. This number indicated that US business is holding back on purchases of equipment. The market’s have treaded water for the last week and a half waiting for something to move them in either direction. Oil’s increase has clearly spooked traders for the near-term.
The 10-Year Treasury rose 10/32 to close at 3.92%. Traders interpreted the drop in durable goods as a sign the economy was slowing down, adding to the feeling the Fed may be near the end of its rate increases. Oddly, the recent spike in oil has not led traders to fear inflationary pressures. Instead, they appear to be looking at the increases as another brake on the economy.
Oil increased 42 cents to close at $59.84 Oil was the story all week. However, it is technically important the price did not close about the psychologically important $60/bbl going into the weekend. The daily chart is approaching ann overbought condition, indicating a move above $60 needs to come in the next few trading sessions. However, the weekly chart still has technical room to the upside.
The dollar lost .6% versus the Euro and .1% versus the Yen. Part of today’s sell-off was technically based. The dollar is over-extended versus the euro, so some selling is in order. However, the lower durable goods number may have led traders to discount the possibility of a US economic rebound, which has been a primary reason for the dollar’s year-long advance versus the euro.