Oil Spike Helps Market Lose Ground
Futures are lower this morning, as Ben Bernanke reiterated what two other Fed officials said yesterday: that the Fed would strongly resist higher inflation, implying that rate hikes might come sooner than expected.
We've also lost ground in the last hour because oil is again spiking toward a new high.
In China, the Shanghai Composite closed down nearly 8 percent to a new 52-week low, after the central bank announced it would raise commercial banks' reserve ratios by a full percentage point in June. That is twice the hike which the market had expected. However, remember that Shanghai was closed yesterday, so this was the first reaction to the drop in the U.S. on Friday. That index is now 50 percent off the all-time high it hit in October.
Nepal announced sharp increases in fuel prices (about 25 percent); they join India, Malaysia, Taiwan, and Malaysia in reducing government subsidies of gasoline.
1) More sign of the times: Philadelphia-based Pep Boys , which specializes in car parts and auto repair, report earnings of $0.10, well above the loss of $0.03 expected. Typically, auto parts company do better in an economic slowdown.
2) Independent oil and gas producer XTO Energy is buying privately held Hunt Petroleum Corporation for $4.186 b in cash and stock. XTO is one of the strongest natural gas producers in the country (they get about 80 percent of their production from natural gas), with huge assets in East Texas and the Barnett Shale.
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