By Kate Gibson
The global recession and uncertainty about the future means traders now routinely bypass what used to be market fundamentals, with the stock and oil markets increasingly taking their cues from one another, analysts said Thursday.
"Traditional links tend to be going out the window. A large part of the market is trading on perception and not fundamentals," said Doug Roberts, chief investment strategist, ChannelCapitalResearch.com.
On Thursday, financial and energy shares led a broad-based move higher as investors shrugged off a slew of dismal economic reports on unemployment, manufacturing and the housing market to focus instead on government steps to bolster the nation's economy and banking system.
Stocks retained gains as President Obama proposed new spending on health care, education and other top priorities in unveiling a $3.6 trillion budget plan for fiscal 2010.
At midday, the Dow Jones Industrial Average (DJI) was up 56.55 points at 7,327.44. The S&P 500 (SPX) gained 6.43 points to 771.33, while the Nasdaq Composite (RIXF) added 5.12 points to 1,430.55.
On the New York Mercantile Exchange, crude-oil futures rose to one-month highs, and were lately up $1.92 to $44.42 a barrel.
"What I think we'll see coming up with the oil and stock markets is traders watching to see if demand for oil starts to increase, which is a positive signal to the stock market that the recession is starting to wane," said Mike Zarembski, senior commodities analysts at OptionsExpress.
"Even though controversial, [President] Obama's budget plan is at least addressing the problem. It's maybe not what I want, but it's better than nothing," said Roberts.
Crude's climb came in the wake of Wednesday's weekly U.S. fuel inventories report that had gasoline supplies dropping more than expected amid increased consumption, heightening thinking that demand for energy could improve further.
The bullish data had crude surging more than 6% to above $42 a barrel on Wednesday, yet the rally was curbed by the stock market's decline.
"It shows what a negative sentiment has on a bullish market. Right now, the stock market really is the dog, and the tail is the energy market. If this market (stocks) were to turn down, you can almost guarantee oil would slump," said Zarembski.
"Oil traders, grain traders, metals traders are all watching the stock market. There are other times when everyone is watching crude oil. The markets seem to swing from one to another, depending on what's in vogue. And right now everybody is watching the stock market - everybody's glass is half full," he said.
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Publié le 26 Février 2009 Copyright © 2009 Dowjones