3 Reasons Markets Were Up as Dow Spikes Despite Earthquake
Markets closed down on Wall Street today: Dow +2.92%, S&P +3.41%, Nasdaq +4.29%, Oil +2.10%, Gold -3.36%.
On the commodities front, Oil (NYSE:USO) climbed to $86.19 a barrel. Precious metals were down, with Gold (NYSE:GLD) falling to $1,828.30 an ounce and Silver (NYSE:SLV) falling 3.56% to $41.82 an ounce.
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Today’s markets were down because:
1) New home sales. This morning the U.S. Department of Commerce released their new home sales data for July 2011, which had sales continuing to decline last month. With the housing market (NYSE:IYR) flooded by cheap foreclosure properties, new homes are facing too much competition and builders are hesitant to start new projects. And as long as the unemployment rate remains high, the high level of foreclosures will continue to dampen new home sales.
2) Banks. The markets had a shaky start this morning, but news from the FDIC that the number of banks on its “Problem List” declined last quarter for the first time since the third quarter of 2006. With the European sovereign debt crisis and new capital requirements, banks have been under a lot of stress lately, which has been stressing out investors afraid of another financial meltdown, but the FDIC’s news calmed those fears with a report that showed banks to be recovering. Unsurprisingly, the bank sector led today’s gains, with JPMorgan (NYSE:JPM), Citigroup (NYSE:C), Barclays (NYSE:BCS), and Wells Fargo (NYSE:WFC) leading sector gains. Bank of America (NYSE:BAC) remained in trouble as questions over capitalization remain.
3) Oil. Today’s surge in the price of oil, which climbed more than 2%, gave the energy sector a boost, with Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Halliburton (NYSE:HAL), and ConocoPhillips (NYSE:COP) all tacking on an extra 2% to 5% to their share prices. The energy sector climbed 3.58% today. Chevron and Exxon were the two biggest gainers of the Dow’s 30 components, 28 of which were up today.