This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

What to Watch: Macro Movers

The first half of the year had surprises for just about everyone. The stock market was weak, corporate profits were better than expected, oil remained robust, job growth was anemic, long interest rates continued to perplex.

What might the second half of 2005 hold in store for investors? Barring some new unforeseen crisis, these issues will continue to drive the economy as well as the financial markets.

Energy and Oil

Crude hit a record in the last week of June, closing (briefly) over $60 a barrel. Back when it was under $40, most economists would have told you that $60 oil would grind global growth to a halt. While there's little doubt that oil is having an impact, it's been more far muted than many had expected.

From a market perspective, the influence has been more pronounced. Trying to correlate the day-to-day gyrations of equity prices with crude has been a fool's errand. But consider the first four months of the year: Crude busted out over $50 in February, and has (mostly) been higher ever since; it's not hard to imagine that the stock market's lousy first half was somehow related.

Yet the relationship between oil prices and the market is far more complex than many realize. Since October 2002, oil has more than doubled in price -- and yet so has the Nasdaq Composite. Where's the inverse correlation so many seem so fond of blaming the market's woes upon?

Recently, I was asked where would the Nasdaq be if oil were still at $25 a barrel? My answer: "probably a lot lower." Why? Many of the same factors that have driven oil higher also have been driving the Nasdaq upwards, including massive government stimulation, ultra-low interest rates and increasing globalization.

But it won't always be that way. So far, the cumulative impact has been somewhat subdued. The impact won't always be this muted. The interrelationship between energy and global growth is nonlinear. There is a tipping point at which oil prices will have more bite, grinding the global economy to a halt. We just haven't hit that level yet.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.01 1.05%
FB $99.75 -4.15%
GOOG $682.74 -0.12%
TSLA $147.99 -8.99%
YHOO $27.05 -3.29%


Chart of I:DJI
DOW 16,027.05 -177.92 -1.10%
S&P 500 1,853.44 -26.61 -1.42%
NASDAQ 4,283.7530 -79.3910 -1.82%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs