As stocks hit new highs, gold and silver suffer
Precious metals tumble as inflation fears ease and the US economy shows strength.
But the real action was in gold (-GC) and silver (-SI). Gold in New York fell by $25 to $1,575.90 an ounce. That was down 1.6% on the day, and it continues the pressures that have pushed gold lower for most of the year.
Silver fell by 69.6 cents to $27.25 an ounce in New York. That was the lowest close for the metal since late summer 2012.Gold is down nearly 6% this year and down about 12.3% from a closing peak of $1,796.50 an ounce on Oct. 4, 2012. While silver is off nearly 10% in 2013, it's also down about 22% from an Oct. 1, 2012, peak at $35.608 an ounce. A loss of 20% or more is the popular definition of a bear market.
The reasons for the selling are multiple, all having to do with the dollar:
- There are worries about Europe and the ultra-high unemployment rates in Spain, Italy, Greece and Cyprus.
- Japan has been working to push the yen lower to make its exports more competitive globally.
- The U.S. economy is looking stronger this year, despite a relatively weak jobs market and the potential that federal spending cuts instituted under a 2011 budget deal will stall domestic growth.
- There have been few inflationary pressures. That had many investors worried when the Federal Reserve embarked on its latest bond-buying program. It's usually called QE3, for a third round of quantitative easing.
If there is an immediate reason to be at least wary. Friday is when the Labor Department reports the March unemployment and non-farm payroll numbers. Both are expected to be decent.
Bright Media Corp. estimated late Tuesday that the economy added 223,000 jobs in March. The consensus estimate is about 195,000 with the unemployment rate holding at 7.7%.
The Dow and S&P 500 moved higher in large part because of a big rally in health-insurance stocks. They surged because it appeared premiums paid under the Medicare Advantage plan could move higher. Most investors had expected premium cuts.
The Dow closed up 89 points to 14,662. The blue chips had been up as many as 111 points. The S&P 500, which set a new closing high on Friday, closed up 8 points to 1,570 after reaching as high as 1,573.66.
This last level is important. It was 2.4 points below the S&P 500's all-time intraday high of 1,576.06, reached on Oct. 11, 2007. A solid push through that level could mean the rally has the strength to move higher.
The Nasdaq Composite Index ($COMPX) climbed 16 points to 3,255, its best close since Nov. 7, 2000.
So, health insurer UnitedHealth (UNH) was the top performer among the 30 Dow stocks, up $3.40 to $62.37 after hitting a 52-week high of $63.95. UnitedHealth contributed 26 points to the Dow's by itself. 26 Dow stocks were higher.
DaVila HealthCare Partners (DVA), which provides kidney-dialysis services, jumped $7.29 to $127.20 and was the the top performer among S&P 500 stocks. It, too, hit a 52-week high: $128.74. Eight of the top 10 S&P 500 performers on Tuesday were healthcare stocks.
At the same time, investors were cheered by a gain in factory orders in February. The gain was spurred by growth in commercial aircraft and automobiles.
March auto sales were up 3.4% from March 2012, and the seasonally adjusted annual sales rate moved up to 15.27 million units from 14.14 million units in March 2012. There was a downside to the sales: the sales rate was the lowest of 2013, but the rate has topped 15 million for five straight months.
Ford Motor (F) shares were up 11 cents to $13.01. General Motors (GM) shares rose 13 cents to $27.93.
If there was a theme to the month it was that light trucks, including sport-utility vehicles, were the big sellers. Most manufacturers saw car sales decline; Honda (HMC) was an exception.
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