It's Not the End of the World

It is no longer boring to talk about the weather.

For critics of Al Gore's theories on global warming, this winter has been inconveniently nonexistent in the Northeast. Seeing flip-flop-wearing families in the park on a New York Saturday morning in January is just not normal. The topic is also no longer the usual taboo because the unseasonable warmth has driven down the price of natural gas and heating oil.

But things aren't always as they seem, and the weather, commodities prices and the stock market can all turn sharply, as investors and Mother Nature can be fickle. Like many of the year's trading sessions thus far, Wednesday was a volatile session as major averages swung between red and green. But stocks turned up late in the day, suggesting that investors are adapting not only to the drop in commodities prices but also to the notion that the Federal Reserve is not ready to signal rate cuts.

"We have had counterintuitive moves with commodities down and the markets down, and this is an inflection point where investors realize that cheaper energy prices are non-inflationary," says Art Hogan, chief markets analyst at Jefferies & Co. "There's a realization that this commodities weakness isn't a hard landing scare," he says, echoing the theme of Tuesday's column.

The price of crude oil plunged 3.8% to a 19-month low of $53.53 per barrel Wednesday. Heating oil finished the day down 2.54%, and natural gas closed up 1.42%.