Stocks turned mixed in afternoon trading Thursday as the bump from the encouraging business-inventories report faded and cracks emerged in the rally. Also, jobless claims rose unexpectedly by 4,000 to 558,000. A couple of retailers beat earnings expectations, including retail titan Wal-Mart.
Equities & Dollar Drive Oil
Equities and a weak dollar continue to give direction to oil traders, said Victor Shum at Purvin & Gertz. He expects a seasonally weak autumnand fundamentals to weigh in, pushing oil down to the $60s.
“Crude has been tracking the broader market equities and the almighty weak U.S. dollar so if you ignore the linkage to the stock and currency markets…oil should be trading around $49-50,” Shum said.
Economy Needs 'Coddling'
Anthony Chan of JPMorgan’s Private Wealth Management said the third and fourth quarters in the U.S. economy will be stronger than France and Germany’s economic results. “That doesn’t mean the economy doesn’t need some coddling,” he said. “If we don’t get some coddling, a W-shaped recovery is always the risk.”
Planning the Fed’s Exit Strategy
Former Federal Reserve Board Gov. Randall Kroszner shares his insight on the Fed’s exit strategy. “The foundation is there…if you look at the Fed’s balance sheet: it bloomed last year, almost tripling with all the lending that was being done, [but now] has come down by almost $1 trillion,” he said. “That shows that the Fed’s balance sheet is quite nimble and can move with market circumstances.”