Crude Oil was the major influence on market direction yesterday as it powered through the $102/barrel barrier and closed above it.
Crude’s move was the result of reports that unrest continued in Libya and the Middle East in general. Supporting upward momentum were news that almost all of Libya’s daily oil production was halted and that Gaddafi continued his assault on rebels in a major oil center.
Gold followed the path higher as uncertainty about the various hotspots (Libya, Tunisia, Yemen and Iran) took center stage. The dollar fell while interest rates rose.
With that backdrop, it’s no surprise that stocks struggled all day, but they managed to eke out a meager gain. The Fed’s beige report supported the domestic markets by suggesting that the economy was getting “modestly stronger” and employment was showing improvement.
While the ADP report indeed showed gains, it has not been in sync with the Labor Department’s jobs report due out this Friday. We’ll have to wait if those numbers will show an actual improvement, or if we’re still treading water.
Until that report is released, it looks like the markets will have to live with whatever the global hotspots will dish out in terms of news reports.
Continued uncertainty will not be helpful to the bullish cause in the long run. Solid economic news, not only domestically but also on a global scale, are needed to provide a springboard from which higher market levels can be reached.