Oil Bubbles Up as Dow Heads to 13,000
CNBC Executive News Editor
With oil prices on the boil, traders are watching to see whether the Dow’s break above the 13,000 level could be a positive for stocks.
Will the third time be the charm?
The Dow Jones Industrial Average first crossed 13,000 intraday Wednesday but failed to finish above that mark for the past two sessions. On Thursday, the Dow looked like it was going to make a run for it but ended just shy of that mark at 12,993, up 46 points from the previous close.
“You’re still looking at Dow 13,000. That’s got them captivated,” said Art Cashin, director of floor operations at UBS. “With oil above $108, this is going to be an interesting test over the next couple of days.”
Dow 13,000 is seen as a psychological factor that could help draw some investors into the market. But it comes at a time when analysts have been warning stocks look set to pull back.
The Standard & Poor's 500, meanwhile, came within a fraction of its 2011 closing high of 1363.61, ending the day up 5 at 1363.46. If it breached that level, it would've been the best close for the S&P since 2008.
Once the S&P passes that mark, traders will be watching to see if it can break 1370, its intraday high of 2011.
The market "looks a little toppy, but it’s been eating people alive. It’s too dangerous to be short,” Cashin said.
This flirting by major indexes with key levels comes as tensions with Iran have driven oil prices sharply higher.
West Texas Intermediate crude oil closed up 1.5 percent at $107.83 per barrel on the Nymex Thursday, while Brent, an international bench mark, rose 0.6 percent to $123.62.
But Miller Tabak strategist Peter Boockvar said the fixation with 13,000 is meaningless.
“That’s irrelevant. I think the market has had a good run here, and the bulls don’t want to give up easily, and they’re going to do their best to keep things elevated because they’re buying on every dip. I still think the market is getting tired, and I don’t expect it to break out again,” said Boockvar.
He said 1370 on the S&P would be meaningful, but only if the market can hold that level.
Cashin said the stock market had appeared to be breaking away from its correlation with the euro but that connection, where the euro rises and risk assets rise, seemed to be influencing markets once more on Thursday.
The euro was above 1.33 Thursday, up nearly a percent.
Boockvar also said the euro may have been a factor behind the market’s move even though European markets were lower and European banks were weak.
“To use that as an excuse to rally the Russell 1.5 percent…I don’t think that’s legitimate,” said Boockvar.
What to Watch
Consumer sentiment for February is released at 09:55 a.m. EST, and new home sales are released at 10:00 a.m.
St. Louis Fed President James Bullard will be on “Squawk Box” at 7 a.m., and Treasury Secretary Tim Geithner will appear at 8:30 a.m. EST.
Follow Patti Domm on Twitter: @pattidomm
Questions? Comments? Email us at firstname.lastname@example.org