Market Outlook
A surge in oil and gas companies pulled the stock market out of a five-day slump on Friday, as the price of crude swung higher. The rally came at the end of another rough week for the market. Since the start of the year, worries about the strength of the global economy and falling oil prices have weighed major indexes down. Even with its strong performance on Friday, the S&P 500 still lost 1 percent for the week, its third straight weekly drop.After the Swiss National Bank shocked financial markets by scrapping the franc’s peg to the euro, gold surged higher on speculation that the franc’s rally could spark a commodities countertrend that would ignite a raft of short covering across the commodities complex. The US Dollar continued its run higher to end the week while Treasuries added another leg up to new all-time highs. Plus Gold joined the party by pushing higher all week.
As seen in the graph below, Gold Mining stocks are blasting off to start the year. The primary reason for gold’s explosion is the Swiss National Bank disassociating the franc from the euro. This surprise move suggests the Swiss currency might be pegged to gold. Also, the impact of lower fuel prices for gold miners should not be overlooked. Gold Miners benefit from lower fuel prices.
Investor Analysis
Exxon Mobil, Chevron and other energy companies led all 10 sectors of the Standard & Poor's 500 index to gains, climbing 3 percent. Oil's seven-month slide had cut its price by more than half. The Utility sector remains the best performing group over the past month, but with earnings season heating up, Consumer Staples and Healthcare and Materials are also performing well. Financial stocks are the biggest loser as disappointing fourth-quarter earnings reports is hurting this group.
By Gregory Clay
Investment Strategist
P.S. click on http://www.theoptionplayer.com/ to sign up for free trade alerts
No comments:
Post a Comment