US stocks surge, a day after falling, on…what, exactly?
Because BofA offered a bullish picture at its investor day? Because crude oil futures slipped 42 cents?
Doesn’t look like much changed between yesterday and today, but stock traders are buying today after selling yesterday. The market has been especially volatile lately, and you can count this as just one more session in that string. It’s not a string that likely to end, either.
DJIA surges 124 (1%) to 12214, S&P 500 gains 12 (0.9%) to 1322, Nasdaq Comp rises 20 (0.7%) to 2766. Crude drops, but is still over $105/barrel. Which means today’s action is just traders playing games with numbers. It was the first gain in three sessions for the Dow, and while it regained about 75% of what it lost over the previous two sessions, it’s still down from Thursday.
Banks do lead the way broadly, but the Dow’s biggest gainers are IBM and Caterpillar. Those two, along with Boeing, are often the stocks traders play when they want to juice the index. John’s written about this more than I have, but Caterpillar’s relatively small float makes it particularly susceptible to, ah, suggestion.
Meanwhile, the euphoria yesterday over rumors floating around that Gadhafi was trying to figure a way to get out of Libya have just disappeared, because all the news today is about pro-Gadhafi forces digging in.
Crude futures were indeed essentially flat today. But, twice in the morning, at least twice that we noticed, the market tried to push Nymex crude under the $103/barrel mark, which was previously a resistance point and now appears to be a support point, because traders turned back both attempts. That means, technically speaking at least, crude futures are still poised to rise.
I expect, too, that crude prices will keep rising, as will prices at the pump. At some point, and I think that point is coming soon, it will start to exert a noticeable drag on the economy. The only question you should be seriously worried about is: will oil prices rise enough to break the economy? We know that they can; we don’t know yet whether they will.