Dow Jones Industrial Average Up – Gold Silver Down But Higher Prices For Crude Oil – Dollar Higher Against Yen But Lower Vs Euro
(Best Syndication News) Investors are wondering if the Dow Jones Industrial Average along with the economy may be poised for a turnaround. Is it time to invest?
On Tuesday the Dow (DJIA) jumped 179 points to 7,395.70 while the S&P 500 climbed 24 points to 778.12. The market closed up in a broad rally with the most traded company, Citigroup, jumping 18 cents to $2.51. All of the major banks along with AIG were higher Tuesday. The American International Group traded at 98 cents. That is up 13 cents or 15 percent.
Silver and gold continue to decline but oil is up to nearly $50 on Tuesday. On the Comex Exchange in New York, April gold futures were selling for $916.80 while May silver futures were selling for $12.67; down .57 and 1.76 percent respectively when compared to Monday.
The weak dollar helped push up light sweet crude oil prices to $49.16 on the COMEX / NYMEX exchange. That is a three month high. Prices rose for the second straight day after Algeria’s oil minister said a supply reeducation agreement will be made with the Oil Producing and Exporting Countries. In Vienna OPEC members agreed to hold output targets steady. They do not want to harm the economy further and risk lower prices later this year.
Compared to a week ago, the other major currencies have gotten stronger. Last week it took .72 British pounds to buy a dollar; today it takes .71 (see chart below). That is a change of -1.41 percent. The dollar has dropped against the Yen as well. Last Tuesday 98.4 yen bought a dollar but today it only took 98.19 yen to purchase a dollar. The Euro gained 1.30 percent compared to the dollar over the past week.
On Tuesday the dollar rose against the Yen and down versus the Euro. Housing starts, which were better than what Germany’s ZEW survey had expected, helped boost the dollar compared to the Yen.
The Euro is near its peak compared to the yen for 2009. The Euro is also stronger compared to the British Pound. But traders are waiting for the U.S. and Japanese central banks to make policy changes.
The Federal Open Market Committee will meet on Wednesday to discus monetary policy. Back in January the Fed lowered their Funds Rate to between zero and one quarter percent. That is about as low as rates can go.
The next tool in the arsenal is called “quantitative easing” or “credit easing”. The Fed could lower long term mortgage interest rates by purchasing long-term Treasury notes. Traders will pay close attention to the Fed statement which will be released Wednesday afternoon.
By Dan Wilson