By R.J. Matson, The New York Observer and Roll Call
Sunday, January 28, 2007
- DJIA lost 78.51 points this week, 0.62%% to 12,487.02.
- Nasdaq Composite dropped 15.82, 0.65%% to 2435.49.
- S and P 500 was also in the red, it shed 8.32 points, 0.58% and closed Friday at 1422.18.
- 10-year Treasury yield rose another 0.106 to 4.879%.
- Crude oil regained a little of the ground it has lost in the last several weeks and was up $2.02, 3.78% to $55.42.
But a common theme in many of this year's forecasts is more volatility for 2007 than last year and, while its still very early, those predictions so far ring true.
This week the Dow surged to its 26th record close in four months on Wednesday and abruptly turned around to dump 119 points the next day. It lost another 15.54 points Friday leaving the index little changed for the year.
What's the cause of this temperamental behavior? Simply, profits and interest rates, same as always. And while interest rates are still historically low and profits historically high, there is not as much confidence they will stay that way as there was last year. There's no clear indication which direction the Fed will move next and the momentum of corporate earnings has slowed. Throw in the housing market wild card and you have the perfect mix for a completely unpredictable market. Be prepared for more turbulence.
Tuesday, January 16, 2007
Sunday, January 14, 2007
- DJIA gained 158.07 points this week, 1.27% to 12,556.08.
- Nasdaq Composite had a great week as well, up 68.57, 2.82% to 2502.82.
- S and P 500 rose 1.49%, 21.02 points and closed Friday at 1430.73.
- 10-year Treasury yield rose another 0.123 to 4.771%.
- Crude oil got slammed another $3.32/bbl, 5.90% to $52.99. (Gas stations are a little slower to change their prices on the way down, aren't they?)
Saturday, January 06, 2007
- DJIA sank 65.14 points this week (-82.68 on Friday), 0.52% to 12,398.01.
- Nasdaq Composite was a different story, up 18.96, 0.78% and closed Friday at 2434.25.
- S and P 500 fell 8.59, 0.61% to 1409.71.
- 10-year Treasury yield rose 15/32 to 4.648%.
- Crude oil dropped a whopping $4.74, 7.76% to $56.31.
This is the part of economics that really has casual stock market observers scratching their heads--167,000 new jobs were created in December and that caused the Dow to drop 83 points? Huh? Why is such great news bad for stocks?
Remember the old rhyme, when rates are low, stocks will grow? Well, job creation that is too rapid is indicative of an economy that is growing too fast and that inflationary risks are present. To curb those risks the Fed raises interest rates. When rates are high, stocks will die.
At least the market has found something to obsess about besides oil.