Courtesy of Scott Martindale, Sabrient Systems and Gradient Analytics
Stocks are finding that psychological barriers at Dow 13,000 and Nasdaq 3,000 will require broader participation to eclipse. Although both the Dow and Nasdaq have exceeded and held above their 2011 highs, the S&P 500 is having difficulty surpassing its 2011 highs near 1370. And the “riskier” indexes like the Russell 2000 small caps, the S&P 400 mid caps, and the MSCI emerging markets indexes all have quite a lot of work to do to even approach their 2011 highs.
Among the 10 U.S. sector iShares, Energy (IYE) has been the winner this week as oil prices have skyrocketed. In fact, prices at the gas pump have become the new all-consuming topic of the day impacting everyone’s pocketbook, and causing worry about its impact on economic recovery. Over the weekend, Iran announced that it would stop selling oil to Great Britain and France in response to a planned European oil embargo this summer. As a result, West Texas Intermediate crude (WTI) rose by $2.65 to close Wednesday at $106.35/barrel, which is the highest price for WTI since May 2011 and a record high for this time of the year. So, it’s no surprise that energy stocks have been the market leaders.
Of course, the other perennial leader is Apple Inc. (AAPL). Hulu might joke in its commercials that it is striving to take over the world, but Apple actually appears to be doing it. $500 is now in its rearview mirror as it marches onward toward global domination.
On Tuesday, the EU announced a deal to “rescue” Greece, thus averting a March debt default. However, they had to agree to more cuts in pensions, wages, and public employee jobs, plus healthcare and defense spending. Even before these cuts, Greece has 20% unemployment, and 40% among its younger workers. And of course, such measures will further erode consumer sentiment and economic activity in Greece. And don’t forget that their creditors have to absorb a $100 billion hit, too. Nevertheless, bond yields in Spain and Italy have dropped in response, as investors gain confidence that there is sufficient conviction to bolster the other struggling eurozone nations.
Although the U.S. economy and unemployment levels are improving, it’s safe to say that the average American is still on a tight budget. And because consumer spending drives corporate earnings growth, Factset Research reports…
