(As of 7:15am, PST)
After a move upward on Friday that brought the major U.S.
indices to their highest levels of 2016, stocks are down today in early trading
once again following the path of oil. Friday marked the fourth consecutive week
that the S&P500 showed positive gains, bringing the index to up over 10% in
the past month and close to unchanged for the year. Today’s drop is closely
tied to a drop in oil prices which has hit the energy sector pretty hard. The drop
in oil follows reports that Iran isn’t inclined to be a cooperative partner at
this point on the production freeze agreement. It’s a light day on the economic
reporting front but a big week for economic news when the Federal Open Market
Committee meets on Tuesday and Wednesday with an announcement on what they will
do with interest rates. Experts believe that the central bank will keep
interest rates on hold even though recent economic trends would support a rate
hike in the short term. The Fed in December raised rates for the first time in
nearly a decade and set the stage for multiple rate hikes in 2016. The
tightening of the equity markets in the beginning of the year has fueled
opinions that the Fed will hold off at least for now but the recent surge in
the markets may bring them back to their original plan. Needless to say,
investors will have a lot to chew on mid-week when they make their
announcement. Europe is still flying high from the stimulus plans that were
announced last week by the European Central Bank and in Asia, most markets were
up in overnight trading.
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