It was a blah day with the averages all finishing lower on the street today. The Dow was down .4% to 12,527, the S&P was down .8% to 1355 and the NASDAQ led the way down 1.1% to 2322. A lot of the pressure on stocks came from a rally in oil.
Oil surged to a high above $112 on an inventory report that showed a draw (decrease) in inventories for the last week. Oil is now up 79% from this time a year ago. We also saw refinery usage kick up a notch, to 83% from 82.4%. When we hear about crude oil prices such as above, they refer to light sweet crude (west
UPS came out and warned about profits. This was a shock given the rise in online shopping. This also should make us all skeptical of any retailer reporting this quarter, especially those that rely heavily on online shoppers. However, the primary cause of this miss was probably gas prices. Thus, FedEx, the rails and all transports saw a lot of downward pressure today.
American Airlines has major issues. The FAA said the wires by the landing gear are bundled wrong in American's MD-80s, which are the company's workhorses for short to mid range flights, including Chicago to NYC, which I’m flying tomorrow… fun! American’s MD-80s fly 1,000-1,200 flights a day - 850 were canceled today. Not only does this hurt revenue, but American has to pay to fix all the planes, rebook passengers (sometimes on different airlines), put passengers in hotels and more. AMR was down 11% today.
This morning Boeing came out with yet another delay in the production of its 787 Dreamliner. This, the third delay, actually resulted in a pop in the stock because the street was expecting a worse delay. With this announcement however, the pressure is squarely on Boeing to produce because the street now expects its planes on time.
Financials were laggards today. Merrill may post a loss of up to $6.5BN on further writedowns. On a better note, Citi showed signs of life, getting close to a deal to sell $12BN of its bad loans to hedge funds for about 90 cents on the dollar. This is a good step for Citi in purging their balance sheet of all the junk it is cluttered with. Even Goldman may be in trouble after announcing its percentage of hard-to-value assets jumped during the first quarter. Goldman also said on half the days of the first quarter they had trading gains or losses of more than $100million. As Mr. Koster said yesterday, traders love volatility.
Gold was up 2%. The dollar fell. Remember, when the dollar falls, commodities that trade in dollars (basically everything) go up.
DJIA 12,527.26 -49.18 (-0.39%)
Nasdaq 2,322.12 -26.64 (-1.13%)
S&P 500 1,354.49 -11.05 (-0.81%)
NYSE Volume 3,527,657,000
2-Yr Bond 1.77% -0.10
10-Yr Bond 3.49% -0.09
30-Yr Bond 4.31% -0.06
Crude Oil (May) 110.87 +2.37
Nat Gas (May) 10.056 +0.359
Gold (June) 937.50 +19.50
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