(as of 7:00 AM PST)
The continuing fall in the price of oil is of great concern to investors this morning. Profit projections for the S&P 500 earnings of the 4th quarter have been slashed heavily because of the large reduction in capital spending that goes along with oil exploration. After a multi-year rally markets seem poised for a pull back seemingly unable to justify the optimistic PE ratios that are usually associated with high profit growth. Some merger and acquisition activity has buffered losses but negative sentiment is heavy. Earnings season kicks off this week, but if analysts are correct it will not provide much of a boost to market indexes. Oil is down 4% while safe haven magnets such as gold and the US dollar are both strong. Interest yields are being driven down as dollars flow out of equities. Hopes for a large economic stimulus program from the European Central Bank to combat deflationary pressures are fading amid bickering among key Euro members. It could be a rough week for markets.
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