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AAPL tanked today as the company announced that founder and CEO Steve Jobs would not appear at the 2009 Macworld convention, and that the next one would be the company’s last. Renewed concerns about Jobs’ health, and who might succeed him should he leave the company, as well as the guess that AAPL has no groundbreaking products to announce at the show, drove the stock lower. That weighed on the market until early afternoon. At the time of this writing, the S&P 500 was positive on the day.
And as if taking a cue from the US Federal Reserve’s aggressive actions to get interest rates lower to boost the flagging economy, OPEC announced today that they would be making their largest ever cut in production -- eliminating 2.2 million barrels of oil a day -- to try to boost the sagging price of crude. Nevertheless, the price of oil fell today on the news that U.S. inventories of crude and gasoline continued to rise. That has to hurt. OPEC nations, whatever their geo-political aspirations, were having the time of their lives when oil was pushing higher every day last spring and summer. Now, with oil nearing $40 a barrel, their economies are hurting, too.
So, if you want to think about the big picture, US interest rates are low, and will probably stay low until the economy starts to improve. That might suggest that stocks have reached a bottom, as the lower rates will eventually spur business growth, and yields on bond investments become less attractive. If the economy does pick up, demand for oil will also likely increase. And that, along with lower supplies because the current cheap price of oil makes companies less willing to explore and drill for additional sources, will probably push the price of oil up. Now, that type of thinking doesn’t help much if you’re day trading the S&P 500 or oil, but it might be a compelling argument for longer-term speculations.
Tom Preston
thinkorswim, Inc.
Member FINRA/SIPC/NFA
thinkorswim, Inc. and its registered employee, Tom Preston, do not solicit or recommend any form of trading in the individual stocks (or their derivatives) mentioned above. Please do careful, independent research before investing any money as well as weigh the possible consequences on your particular financial situation before doing so. The risk of loss may be substantial.
