Saturday, August 9, 2008

Week in Review - Crude Oil Drops to $115, The Stock Market Rallies

Wall Street is hoping that the drop in crude oil prices today to $115 is just a continuation of a trend. With oil dropping, inflation worries have lessened which should help boost the prospects for profit growth. Also, the dollar strengthened against the Euro for its best finish in 6 months.

With the drop in oil and great earnings from McDonald's (MCD) today, the market had its best week since April. Twenty-eight out of thirty Dow component stocks were higher today.

The Dow Jones industrials (.DJI) finished the week with a 3.6% gain, its best weekly gain since the week of April 14. It was the highest close for the Dow since June 25.

The S&P 500 (.GSPC) had a 3% gain for the week, and this was its best week since the week of April 14.

The NASDAQ (.IXIC) had a weekly gain of 4.5% which was its fourth weekly gain in a row and its best weekly showing since the week of April 14.

Crude oil's drop had it fall 8% for the week, but it is still up 20% for the year. The $115 close was its lowest since May 2.

The next big report to move the market will be Thursday's release of the Consumer Price Index (CPI) for July. Economists are currently predicting a rise of 0.4% overall with a rise of 0.2% of the "core" CPI (core CPI excludes food and energy prices). This would be a huge positive versus the June CPI reading of 1.1% overall and 0.3% Core CPI.

Sources: CBSMarketwatch, Yahoo, Reuters

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