Will Stocks Break Through Resistance?

  • February 21, 2003
  • Vincent Mao

It was a volatile
session today as the impending war with Iraq
and an explosion at a New York petroleum storage facility shook up the equity
and energy markets. Yesterday, Defense Secretary Donald Rumsfeld said that US
troops are ready to attack as soon as they get the “OK” from President Bush.
Both the US and UK will present another resolution before the UN Security
Council next week. An explosion at ExxonMobil fuel storage facility near Staten
Island briefly resparked fears of terrorism, but New York Mayor Michael
Bloomberg called it an accident and not terrorists related. 

Stock index futures staged a healthy turnaround
after an early morning sell-off triggered by the explosion. Dow futures and S&P
futures sank about 80 points and 9 points, respectively, after the incident, but
recovered and even headed into positive territory later in the session. Benign
reports of inflation on the consumer side also helped stock index futures. At
the close, the March Dow contract
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gained 8.20 to 847.00, and the NDX
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above Tuesday’s high would be very constructive. 

The dollar also rebounded as stocks recovered.
The March dollar index gained 0.60 to 100.25 after bouncing off support. 

Treasury futures sold off today as the threat of
inflation does not appear to be apparent on the consumer side. The January CPI
rose 0.3% or slightly less than an expected 0.4% increase. Meanwhile, the core
CPI which strips out volatile food and energy costs rose 0.1% vs. an expected
rise of 0.2%. Most of the gain in the CPI was attributed to energy costs.
Yesterday the Department of Labor revealed that producer prices rose at the
fastest rate in more than 13 years. The 30-year contract
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to 113 4/32 and the 10-year contract
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Crude and other energies had a wild ride today.
April crude
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settled at 35.58 up 0.86 for the day. Natural gas
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3.318 and heating oil
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Gold slipped today and formed an inside bar.
April gold
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Vincent Mao

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