BP Sinks to Nearly 14-Year Low

BP drops midday to a nearly 14-year low.

BP shares went from $34 to $31.50 in about an hour midday. What happened? You have senators walking around talking about suing BP for everything, including lost jobs; you have worries that the dividend (currently at a better than 10 percent yield) will be wiped out; and you have whispers on trading desks that it is increasingly likely that BP, or its U.S. subsidiary...may file for bankruptcy.

Elsewhere: better tone to market, short covering evident. Through much of May, shorting was the norm, plenty of shops had lists of stocks — particularly financials, energy, consumer discretionary and materials — that were likely short candidates.

That mania seems to be wearing off. Financials, energy, consumer discretionary and materials are the leaders today. Oversold is certainly a factor, but not the only one. Why now?

1) euro stabilizing in last several days, with some signs credit stress has been easing;

2) Bernanke testimony went well, with strong support for Europe and the euro;

3) European countries are issuing debt (Portugal today) which is going well and the demand for dollars across the Eurozone appears to be stabilizing.

4) dividend raises by Caterpillar (FedEx raised on Monday), buybacks from Bunge and KBR are also incremental positives.

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