Once again,an oil spike in the middle of the day has spoiled the modest rally we were enjoying. This has happened often, of course, but today's action was a bit more disturbing. Recall that many believe that if we could only get the dollar out of its recent trading range, that would pressure commodities and provide relief to stocks.
Today, the dollar index traded at its highest levels since February, certainly above its recent range, and it did not drop commodities. Maybe a sustained rally will, but this theory has got some holes short-term.
Airlines nosedived again, with AMR, United, and US Air down double-digits.
Morgan Stanley made an interesting call, urging clients to sell energy and buy financial stocks. Gutsy, but cynics were all over this call, saying why are you selling a sector where earnings are growing to buy a sector where earnings are shrinking?
Pharmaceuticals, which should have bounced after four days of heavy selling, did not. New lows for Merck,Sanofi,Bristol Meyers .
Other Dow components at new lows include GE (our parent company) and GM .
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