Dow falls 29 as crude oil tops $112

Stocks stumble as silver crosses $40 for the first time since 1980 and gold hits a new high. Traders pile into commodities believing the Fed won't raise rates any time soon. A government shutdown looks likely. Techs are weak.

By Charley Blaine Apr 8, 2011 1:18PM

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.


Article continues below.


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)











31Comments
Apr 8, 2011 2:27PM
avatar
Why are they messing around? Just raise it to $170 a barrel so they can put the whole country in a recession again and they will get bail outs by the government.
Apr 8, 2011 3:53PM
avatar

Those greedy people objecting to paying high prices for oil.  How greedy can you be wanting $3 gasoline...   PAY your fair share...

 

Obama campaigned on wanting $5 gasoline, why do think he is anti-drilling?  He needs high gasoline prices so his high costs alternative energy looks better.

 

We are following Obama's energy policy, if you voted for him, QUIT complaining....

 

avatar
Does any one see the irony in this. The Repubs want to halt abortion funding in DC, therefore increasing the numbers of future dem voters! And the DEM's want to continue aborting future DEM voters in the district!
Apr 8, 2011 3:50PM
avatar
Talk about an institution that is damaging the economy.  The price of oil and it's amazing instant impact on gas prices is making it much harder for people both young and old.  But of course they don't realize that when gas prices go up so does food and every other item sold.  But of course our Federal Government won't do anything about it.  Not to say that they should, but at least give fair warning to these gas companies about raising their prices at every increase in a barrel of oil.  Current in my area it is selling at 3.69 for regular gas.  And I'm sure it will go up tomorrow because of today. I shouldn't say this but they should take oil off the market, and then stuff like this won't happen.
Apr 8, 2011 5:04PM
avatar
LETS SHUT DOWN THE GOVERNMENT ANP PARK OUR VEHICLES FOR A WEEK. THEN SEE WHAT SHAKES OUT.
Apr 8, 2011 3:08PM
avatar
Like we said earlier, be cautious today...Manipulators in complete control on and off the floor...At approximately 1415 hrs the call came to accelerate the selling....The goal is to bring us down triple digits...Very likely by what we see here so far...Why? Because they can, because that's how these scumbags make their money, by cheating and stealing...Be very careful this last hour.
Apr 8, 2011 2:56PM
avatar
Ka-pow!! That was the sound of the bullet leaving the barrel as it goes into the head of the middle class. Yep Greed and Wall street have seen to that execution.
Apr 8, 2011 3:52PM
avatar

Well, the GD speculators and the Wall Street Big Boys continue to get rich.  The oil companies are raking in the profits as usual. The banks are foreclosing on every property they can see...guess everything's going just great.  If you're in the upper 2% of our population.  And our government's getting rerady to shut down. What an economic recovery! 

 

Those of us caught in the middle, the majority, need to put our foot down fast.  No more of this BS.

Stop the speculation. Tell the banks to back off and tell the oil companies we are going to tax their butts.

 

We all, except for the rich 2%, ought to be mad as hell and not willing to take this any more.

Apr 8, 2011 2:28PM
avatar
Oh that's right they can't get bail outs, the government is shutting down.
Apr 8, 2011 4:25PM
avatar
Haven't we seen this before? If there was anything that justified this market being down today we would have been down triple digits easily...That's what these scumbags wanted, that's why they are leaving a bit disappointed...Still, they had an ok day, did their cheating and stealing as usual. Of course it could have been worse, but luckily we were able to recover and do some buying late. Manipulators are still in charge of this market and the SEC opts to close their eyes and ignore the whole situation; they are worthless anyway, remember Mr Madoff? That should tell you all about the sorry SEC. Have a great weekend all.
Apr 8, 2011 4:12PM
avatar

Hmmm....how much should we tax the oil companies DrBoogie?   About $5 a gallon?   I am sure Exxon will not raise the price at the pump the amount of tax you propose....  LOL

 

Stupid liberals....they have not figured out yet that every nickel in corporate taxes is paid for by the customers...   Raising corporate taxes just means more expensive gasoline....

avatar
Exxon must be able to hide profits very well. Their production costs in the Gulf of Mexico are $20 a barrel and only $5 a barrel in West Texas. This means any price above $20 a barrel for oil is pure profit for them. 

Wonder how they hide the profit as they only made like 15 percent profit last year from sells.


Apr 8, 2011 2:29PM
Apr 8, 2011 5:10PM
avatar
I agree if you tax the Oil companies more, then they will pass that expense on to the consumer.  And of course their reasoning is that their stock holders expect a certain return.  Talk about a bunch of bull.
Apr 8, 2011 2:20PM
avatar
they killed my post..............th​e socialists hate prosperity!
Apr 8, 2011 4:50PM
avatar
I disagree with Mirage on Obama wanting $5 gas.  No politician would ever want $5 gas this close to an election.  In fact, Obama has recently (belatedly) endorsed natural gas, which is cleaner and much cheaper and more plentiful than oil.  I've read that we have more than a 100 year supply in this country. Just converting heavy trucks and buses to natural gas would significantly reduce demand for oil in this country.
Apr 8, 2011 5:13PM
avatar
The fed needs to start being proactive and not reactive.  If you don't feel well you go see a doctor, you don't wait until it is so bad they need to send an ambulance........
Apr 8, 2011 4:43PM
avatar

By FAIR I hope you mean EQUAL...   Or do you mean like Democrats....you pay, but not me...  Democrats never like equality when it comes to paying for govenment...they believe firmly that some are more equal than others, and they should pay less...

 

 

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