Same old obsession
Tuesday, May 06, 2008
Scratch out the old record for crude oil and replace it with this one: $122.36 (U.S.) a barrel. Yes, oil has returned with a vengeance from its recent slump, rising nearly 9 per cent in the past four trading days, and $2.39 a barrel on Tuesday alone.
You can blame it on perceived supply disruptions in Nigeria or the weaker U.S. dollar or the fact that Goldman Sachs has predicted oil prices could jump to a high of $200 a barrel within the next six to 24 months – but either way, oil is back on the minds of investors.
That, of course, is good news for a big chunk of the S[amp]amp;P/TSX composite index. It rose 77 points, or 0.5 per cent, to 14,351 at midday on Tuesday, led by commodity producers. Energy stocks were up 2.2 per cent and materials stocks were up 1.7 per cent. In particular, Canadian Oil Sands Trust shot up 5.2 per cent.
The Dow Jones industrial average fell 23 points, or 0.2 per cent, to 12,947, weighed down in part by concerns over the impact runaway energy costs are going to have on the already-fragile U.S. consumer. Home Depot Inc. fell 1.7 per cent and Wal-Mart Stores Inc. fell 1.4 per cent.
The broader S[amp]amp;P 500 fell 2 points, to 1405. Curiously, two bad-news stocks were among the biggest winners. Yahoo Inc. jumped 6.6 per cent a day after takeover talks with Microsoft Corp. fell through, sending its stock hurtling downward. Is there still hope for a deal?
As well, Fannie Mae shrugged off earlier losses after it reported dismal results in the first quarter and announced plans to raise capital. Its stock rose 5.1 per cent.
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