If there are such things as moral victories in the stock market, perhaps Wednesday marked such an event — witness the fact that crude oil prices again jumped above $100 a barrel (above $102, in fact) and stocks were actually able to eke out a gain.
A small one, of course, with the Dow Jones Total Stock Market Index gaining just 0.2%, but for bulls this certainly beats the alternative of having the Dow Jones Industrial Average close below 12,000 for the first time since Jan. 31.
As it turned out, the Dow gained 9 points to 12,067, the Nasdaq rose 11 points to 2748 and the S&P 500 added 2 points to 1308.
The idea that stocks have gained essentially zero in the last month doesn’t provide bulls with much to boast about, and as the market peak of 2011 continues to fade in memory, higher oil prices and a reminder from the Fed’s Beige Book report on Tuesday that higher input prices are universally now a part of doing business are more difficult to ignore.
The poor airline sector continues to get hammered. The Dow Jones U.S. Airlines Index fell another 2.2% to five-and-a-half-month lows. Delta (NYSE:DAL) fell 4.3%, while United Continental (NYSE:UAL) slipped 2.2%.
The bond market seemed to focus on the Fed’s inflationary talk, as the 10-year note saw its yield jump back up to 3.47%.
And also take a look at the precious metal trade, which gave us both an all-time high in gold prices as well as another 31-year high in silver prices.
On the other hand, this was a “win,” right? And the outperformance of both the Nasdaq and the small-cap Russell 2000 (which gained 0.5%) does suggest that there is some willingness of some investor contingent to keep hammering away at the buy-the-dip strategy that has worked so well for the past six months.
Even with the rise of oil, and the longer-term climb in all commodities, discussion of squeezed profit margins is still on the back burner for most investors, possibly until they’re faced with companies — maybe as early as next month — warning them that first-quarter profits are not going to measure up.
