Falling Oil Prices Lifts Markets
By Chris Puplava, December 26, 2006
The markets rose in early morning trading as oil fell due to mild winter conditions, with oil prices falling more than a dollar a barrel. Brent crude fell $1.32 (-2.12%) to $61.10 a barrel while Henry Hub spot natural gas fell below $6/mbtu and was down 3.29%, falling to $5.88/mbtu.
The drop in oil came despite U.N. sanctions against Iran that were approved over the weekend and the announcement by OPEC of plans to reduce output by an additional 500,000 barrels a day beginning in February after a 1.2 million barrels/day previously announced cut. In response to the U.N. sanctions, Iranian nuclear negotiator Ali Larijani said that Iran would begin work at the Natanz nuclear plant on Sunday in response to the sanctions.
The warmer weather and drop in energy prices is spurring consumer spending during the holiday shopping season as the weekly chain store sales numbers are rising since the drop in the week after Thanksgiving.
Source: International Council of Shopping Centers
The markets remained range-bound through the rest of the day though the Down Jones Industrial Average continued to climb modestly, posting a gain of 64.41 points to close at 12407.63. The S&P 500 rose6.14 points to close at 1416.90 with the NASDAQ rising 12.33 points to close at 2413.51.
The 10-year note yield fell to 4.603% and the dollar index posted a gain on the day, rising 0.26 points to close at 84.07. Advancing issues represented 66% and 59% for the NYSE and NASDAQ respectively, with up volume representing 70% and 62% of total volume on the NYSE and NASDAQ.
Energy commodities were all down on the day after a warm weekend across most of the country, falling sharply in early morning trading. Oil was down more than 2% with spot natural gas down more than 3%. Precious metals in the green on the day with gold up $4.15/oz to $624.90/oz and silver rising $0.075/oz to close at $12.6650oz.
Overseas markets were mostly up with the largest advance coming from Mexico's Bolsa index, up 1.07% and the largest decline coming from Germany's Dax index, down 1.08%.
The market advance was broad based as all ten S&P 500 sector performances were up on the day with materials putting in the biggest sowing, up 0.93% on the day followed by financial and technology, up 0.69% and 0.55% respectively. Health care and energy put in the weakest performances, up 0.17% and 0.18% respectively.
Have a pleasant weekend,
© 2006 Chris Puplava