Stocks Pull Back to Trade Mixed
09/02/08 - 02:25 PM EDT
Mike Taylor
Updated from 1:00 p.m. EDT
Stocks in New York were easing from their early highs Tuesday afternoon but were still gaining substantially after Hurricane Gustav failed to cause major oil-supply disruptions, sending crude prices much lower. The Dow Jones Industrial Average, up as much as 230 points earlier, was recently up 1.9 points to 11,545, and the S&P 500 was down 5.3 points to 1277. The Nasdaq gave back 20 points to 2347. Even as stocks in the financial and consumer-goods sectors were advancing as oil prices fell, minerals and oil-related companies were getting hit, causing the major indices to jerk closer to the baseline. While Dow members Bank of America (BAC Quote - Cramer on BAC - Stock Picks) and General Motors (GM Quote - Cramer on GM - Stock Picks) were each jumping more than 4%, Chevron (CVX Quote - Cramer on CVX - Stock Picks) and Alcoa (AA Quote - Cramer on AA - Stock Picks) were down 2.9% and 5.2%, respectively. As stocks climbed, the price of crude oil was plummeting $6.30 to $109.16, after Gustav hit the Louisiana coast but largely spared New Orleans and energy-production facilities in the area. Gold was down $22.10 to $813.10. "I think you're going to see a continuation of the selloff [in oil], which obviously is beneficial to equities in the short term," said Chris Johnson, CEO and chief investment strategist at Johnson Research. He said that on a technical basis, the next important price levels for crude are $100, then $90. Johnson said that speculative money has largely left the oil trade. "This group ... went from being net long to net short in about a week or so," he said. "The speculators are the first ones out. Now everybody else is going to get out." He said that the decline in oil prices will benefit equities as money that had sat on the sideline or been in commodities will need to find another place to go. As for corporate news, Internet company Google (GOOG Quote - Cramer on GOOG - Stock Picks) said it will develop its own Web browser, called Chrome, in an effort to compete with Microsoft (MSFT Quote - Cramer on MSFT - Stock Picks).
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