(as of 7:20 am PST)
As oil goes, so goes the market…well, except for yesterday.
The culprit for this change in a trend that has been going on for several weeks
now was a report from the Federal Reserve following their meeting yesterday.
Oil rebounded for the first time in several sessions with the markets following
suit in early trading. The divergence between oil and stocks occurred yesterday
afternoon after the release of the Fed’s latest rate decision, which darkened
the mood and brought both the Dow and S&P500 down over 1%. So what did the
Fed say to have such an immediate impact on investor sentiment? Essentially
they weren’t as dovish as analysts would have liked, leaving the door open for
a March rate increase while still using language that suggested they were
cautious because of slow economic growth and increased global market turmoil.
This hint of uncertainty sent markets downward in the late afternoon. Today
however, we are back on the “follow the path of oil” trend. In early trading,
all of the major indices are trading up as oil is up to $34 per barrel in
response to news that Russia and OPEC may cut output. Positive earnings reports
are boosting investor sentiment also today with Facebook leading the charge on
strong results. It’s already been a busy day of economic reporting news with
the December Durable Goods Orders reporting a decline of over 5%. Order
declines were seen in just about every area but overall this report hasn’t
diverted the markets attention from the positive movement in oil.
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