Wednesday's U.S. Market Recap

From Schaeffer's Market Recap, Wednesday, November 14, 2007

The morning started with news that the producer price index inched higher and retail sales advanced during October. This data was considered benign, leaving investors to take a break from the recent rash of volatility. Investors also turned to speculation over Fed rate cuts, with the Fed fund futures dropping by 10%, putting today's odds of a December rate cut to 4.25% at 70% odds. After spending a majority of the day on the shelf and allowing the market to bounce between no gain and a 40-point gain, volatility emerged in the final half-hour and the Dow walked off the veritable cliff, plummeting to a triple-digit loss.

When all was said and done, the Dow Jones Industrial Average (DJIA 13,223.9) shed nearly 90 points. All but 7 of the Dow's 30 components slipped into negative territory, with Wal-Mart Stores and Coca-Cola leading the advancers. On the down side, IBM, Disney, Boeing, Caterpillar and 3M Company all dropped heavily. Technically, today's rally met its demise in the form of the Dow's steeply declining 10-day moving average.

Yesterday's sharp sell-off in crude seems to be just that - yesterday's news. Crude futures rebounded today, bringing an end to the 2-day sell-off. Today's advance was brought forth thanks to forecasts showing U.S. crude inventories may decline for a fourth week. Tomorrow's holiday-delayed crude inventories reports are expected to show a 700,000-barrel drop in crude prices, sentiment that some analysts believe is supporting the market for black gold. The front-month oil contract reclaimed $2.92 (or 3.2%) to close at $94.09 per barrel. The contract set an intraday high of $94.30.

Gold futures rallied today, bringing their own 2-day losing streak to a stop. December-dated gold added $15.70 (2%) to close at $814.70 an ounce. While the dollar gained ground on the yen, it slipped versus the euro as risk aversion continued to fade. The dollar index slipped lower as well. Other metals followed suit, with copper advancing 6% (in the wake of an earthquake in Chile, the world's largest copper producer) and silver tacking on 3%.