Oil Rises $99 Overnight, Settles to $97 a barrel

Stocks Fall as Oil Flirts With $100 a Barrel

NY Times
November 21, 2007

A late sell-off in the final minutes of trading sent stocks down sharply today, with the Dow Jones industrial average closing at its lowest level since April. The Standard & Poor’s 500-stock index, a broad measure of the equity market, fell into negative territory for the year.

The plunge came as investors remain frightened and uncertain about a credit crisis that does not show any signs of easing. Freddie Mac, considered a backstop for the mortgage industry, said yesterday that it lost $2 billion last quarter because of increased foreclosures tied to subprime mortgage defaults. Oil prices flirted with the symbolic $100-a-barrel level in overnight trading. Markets in Asia and Europe dropped sharply as investors questioned whether the United States economy will slow more than expected. And investors fled to the safety of relatively stable government bonds.

The Dow Jones industrials, off less than 100 points soon before 3 p.m., finished down 211.10 points, to 12,799.04, a 1.6 percent decline. It was the lowest close since April 19. The index fell even below the low ebb of trading during the summer’s credit crisis, when it finished at 12,845.78 on Aug. 16.

The S.& P. 500 index fell 22.93 points, also 1.6 percent, to 1,416.77, putting it down 0.11 percent for the year.

“This is an ugly week,” said James Paulsen, chief investment strategist at Wells Capital Management. Indeed: the Dow lost 2.9 percent of its value in the last three days alone.

Some market watchers suggested that lower trading levels during a holiday week make the market more volatile, but at least one analyst disputed that notion. “I don’t know of anyone taking a day off today,” said Dennis Davitt, who oversees equity derivative trading for Credit Suisse. “Not in these conditions.”

Crude oil futures briefly rose above $99 in overnight trading and an Energy Department report showed that inventories fell slightly last week, leaving investors wondering how soon oil will be nudged above its inflation-adjusted record of $102. Crude settled in New York trading at $97.29, down 74 cents.

The recent run-up in oil prices, which threaten to curb consumer spending, dovetails with a shaky economic outlook released by the Federal Reserve yesterday, which predicted a slowdown in growth over the coming months.

The overnight rout in foreign markets reflected a broad reaction to the Fed’s grim projections and a growing sense that the besieged housing market, which once helped American consumers buy the world’s products and services, has not hit bottom.

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Dollar hits new low versus euro

China View
November 22, 2007

NEW YORK, Nov. 21 (Xinhua) — The dollar dropped to new low against the euro for the second straight day Wednesday on worries about credit market losses and the health of the U.S. economy.

The U.S. currency also fell to a two-year low against the yen on Wednesday as investors sold higher-yielding assets financed by borrowing in Japan.

The dollar traded at 1.4858 dollars against the euro late Wednesday. It dropped to a record low of 1.4870 against the euro and 1.1016 versus the Swiss franc in earlier trading on speculation that the Federal Reserve will cut interest rates for a third time this year in December to prevent the economy from falling into a recession.

The dollar has declined 11.2 percent this year against the euro since the Federal Reserve began cutting rates in mid-September.

The dollar fell as low as 108.26 yen, the first time it has fell below 109 yen since June 2005, as global stocks weakened and oil prices surged toward 100 dollars a barrel. It stood at 108.63 yen in late trading.

Analysts said further sharp currency moves are likely in the near term, with U.S. markets closed on Thursday for the Thanksgiving holiday and trading likely to be thin on Friday.


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