Dow falls 29 as crude oil tops $112

Updated: 6:26 p.m. ET

 

Stocks fell back today as a lower dollar allowed crude oil to push nearly to $113 a barrel and the federal government moved ever closer to a shutdown.

Gold, meanwhile, surged above $1,470 for the first time, with silver topping $40 an ounce for the first time since 1980. Interest rates were higher.

Energy, health care and materials stocks were the market leaders, and financial, technology and transportation shares sagged as uncertainty grew over how the economy would fare under the double whammy of high gasoline prices and a government closure.

The Dow Jones industrials ($INDU) closed down 29 points to 12,380. The Standard & Poor's 500 Index ($INX) dropped 5 points to 1,328, and the Nasdaq Composite Index ($COMPX) was off 16 points to 2,780.

All of the stocks in the Dow Jones Transportation Index moved lower on the day, with airlines the biggest losers because fuel constitutes so much of their costs. Watch the transports going forward. They started to lead the market lower as the market crash of 2008 took form.

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The Dow rose more than 40 points right after the open but fell back, in part, because Dallas Federal Reserve Bank President Richard Fisher said the Federal Reserve System should consider ending its program of buying $600 billion in Treasury securities now. The program risks adding too many inflationary pressures to the economy, he told the Society of American Business Editors and Writers.

The market's finish came after a wave of selling hit shortly after 2 p.m. ET and drove the Dow down as many as 89 points before stabilizing just before 3 p.m. All of the indexes trimmed their losses substantially in the last hour of trading on what appeared to be bargain hunting.

The Dow finished just about flat on the week The S&P 500 is off 4 points, or a whopping 0.03%. The Nasdaq ended the week off 9 points, or 0.3%. The Russell 2000 Index ($RUT.X), which closed at a new high of 854.17 on Wednesday, dropped 1% today to 841 and finished off 0.8% for the week.

For the year, the Dow is up 6.9%, with the S&P 500 up 5.6%, the Nasdaq up 4.8% and the Russell up 7.3%.

Markets for the week
			4/8/2011			4/1/2011			% chg.			YTD chg.
Dow industrials			12,379.90			12,376.72			0.03%			6.93%
S&P 500			1,328.16			1,332.41			-0.32%			5.61%
Nasdaq			2,780.41			2,789.60			-0.33%			4.81%
Russell 2000			840.89			846.77			-0.69%			7.30%
Crude oil			$112.79			$107.94			4.49%			23.43%
(per barrel)
U.S. Dollar Index			75.27			76.08			-1.06%			-5.06%
10-yr. Treasury			3.57%			3.451%			3.45%			8.02%
Gold			$1,474.10			$1,428.90			3.16%			3.71%
(per troy ounce)

A big run-up in commodities
Fisher's inflation concerns mirror what's happening in commodity markets. Crude oil in New York  settled up $2.49 to $112.79, its highest level since Aug. 29, 2008. Brent crude settled up  $3.98 a barrel to $126.65. That was the highest finish since July 30, 2008.

The national retail price of gasoline was $3.739 a gallon, AAA's Daily Fuel Gauge Report said today, up from Thursday's $3.725 and up 21.7% this year. It will definitely move higher, and there were fears it will top $4.114 a gallon, its 2008 peak.

Gold hit a new intraday high of $1,476.20 an ounce before settling at $1,474.10, up $14.80, and silver was up $1.056 to $40.608 an ounce. For the week, gold was up 3.2%, with silver up 7.6%. Silver is up 31.3% on the year and appears poised to make a run for $50, the metal's all-time high set in 1980. Gold is up 3.7%.

Interest rates moved higher,with the 10-year Treasury yield hitting 3.577%, up from Thursday's 3.555%. The 10-year yield is the highest since Feb. 18.

Metals and, especially, energy prices are on the verge of bubble levels. Crude oil, for example, is trading more than 30% above its 200-day moving average. That's a very speculative level and the highest differential between the current price and the moving average since Nov. 3. In 2008, the gap was as much as 41%.

But commodity traders haven't cared. They've been buying oil, silver, gold and other commodities anticipating that the Federal Reserve won't raise rates for some time. It's higher rates -- and, perhaps, a move by futures exchanges to impose larger margin requirements -- that will break the price rise.

As the commodity prices have risen, so to have the exchange-traded funds based on the commodities. The iShares Silver Trust (SLV) ETF jumped 2.9% to $39.86 and is up 32% for the year. The U.S. Oil Fund (USO) added 2.6% to $45.15 and is up 15.7%.

Energy prices -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Crude oil			$112.79			$110.30			5.69%			23.43%
(per barrel)
Heating oil			$3.3197			$3.2060			7.44%			30.51%
(per gallon)
Natural gas			$4.0410			$4.0570			-7.93%			-8.26%
(per mil. BTU)
Unleaded gasoline			$3.2607			$3.1865			-7.93%			-8.26%
(per gallon)
Brent crude			$126.65			$122.67			8.09%			33.67%
(per barrel)
Retail gasoline			$3.7390			$3.7250			3.69%			21.71%
(per gallon; AAA)

A government shutdown looms
The markets were assuming that the dispute over the federal budget will shut down the federal government. 

Democrats have agreed to $38 billion in U.S. budget cuts, and funding for Planned Parenthood remains the only policy sticking point in talks aimed at avoiding a government shutdown tonight, Senate Majority Leader Harry Reid, D-Nev., told reporters.

Pfizer, Chevron lead the Dow
Drug makers Merck (MRK) and Pfizer (PFE) were the top performers among the 30 Dow stocks, up 1% to $33.67 and 0.6% to $20.46, respectively. Oil giant Chevron (CVX) was third, up 0.7% to $109.66. Chevron hit a 52-week high at $109.94 during the day.

In addition, Exxon Mobil (XOM) was up 0.2% to $85.95. Occidental Petroleum (OXY) added 2.6% to $103.72.

Iron-ore producer Cliffs Natural Resources (CLF) gained 0.4% to $98.70. Silver-miner Pan-American Silver (PAAS) was up 8.4% to $42.65.

Freeport-McMoRan Copper & Gold (FCX) slipped 0.4% to $57.23, and Newmont Mining (NEM) dropped 0.5% to $57.99. Aluminum giant Alcoa (AA) was off 1.1% to $17.92. The company opens the first-quarter earnings season after Monday's close.

Technology shares were weaker, however. Apple (AAPL) was off 0.9% to $335.06. Cisco Systems (CSCO) dropped 1.5% to $17.65.

But online travel company Expedia (EXPE) was up 13% to $25.30 after the company said it would spin off its TripAdvisor business into a separate, publicly traded company. Expedia was the top performer among S&P 500 and Nasdaq-100 ($NDX.X) stocks.

The Nasdaq-100 was off 12 points to 2,321. 

Short hits from the markets -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.040%			0.040%			-55.56%			-66.67%
5-year Treasury note			2.300%			2.282%			3.37%			14.09%
10-year Treasury note			3.570%			3.555%			3.36%			8.02%
30-year Treasury bond			4.630%			4.623%			2.71%			6.14%
Currencies
U.S. Dollar Index			75.273			75.81			-1.05%			-5.06%
British pound			$1.6369			$1.6324			2.08%			4.89%
(in U.S. $)
U.S. $ in pounds			£0.611			£0.613			-2.04%			-4.67%
Euro in dollars			$1.446			$1.431			2.05%			8.08%
(in U.S. $)
U.S. $ in euros			€ 0.692			€ 0.699			-2.01%			-7.48%
U.S. $ in yen			85.034			85.000			2.04%			4.51%
U.S. $ in Chinese			6.561			6.540			-0.15%			-0.81%
yuan
Canada dollar			$1.045			$1.043			1.35%			4.15%
(in U.S. $)
U.S. dollar			$0.958			$0.958			-1.32%			-3.97%
(in Canadian $)
Commodities
Gold			$1,474.10			$1,459.30			2.38%			3.71%
(per troy ounce)
Copper			$4.502			$4.417			4.50%			1.23%
(per pound)
Silver			$40.608			$39.552			7.18%			31.26%
(per troy ounce)
Wheat			$7.9750			$7.7325			4.49%			0.41%
(per bushel)
Corn			$7.6800			$7.5900			10.78%			23.37%
(per bushel)
Cotton			$2.0297			$2.0822			1.37%			40.16%
(per pound)
Crude oil			$112.79			$110.30			5.69%			23.43%
(per barrel)