The story of the day was the weakness in the US dollar and the amazing strength of major commodities. The dollar hit a new low versus the euro today and for the first time in history the Canadian dollar is on par with the US dollar. The pric
e of oil skyrocketed again, trading as high as $83.90 a barrel on the day, before settling at $83.37. Gold prices also surged to 26 year highs, shooting above $740. All of this news led to more and more talk about future inflation possibilities. Just last night I wrote about the inflation worries that many economists, and if there are many more days like today, these worries will become more significant in a hurry.
The Dow finished lower by 49 points on the day. The Nasdaq closed down by 12, and the S&P by 10, or .67%.
The strongest sectors should be easy to predict, yes its the basic material and energy stocks.
Gold stocks were extremely strong on the day, with many of them hitting new yearly highs. Meridian Gold Inc. (NYSE:MDG) shares rose by 6.41% after Yamana Gold (NYSE:AUY) sweetened its offer on its hostile bid to takeover the company. Gold Fields Limited (NYSE:GFI), the South African gold producer, saw its shares rise by 3.33% on strong volume. Silver companies were actually even stronger on the day today. Silver Wheaton Corporation (NYSE:SLW) gained 7.6% today. Pan American Silver (NYSE:PAAS) shares gained 6.88% on the day.
Oil Services and Equipment stocks continued their recent very strong streak, gaining further today. National-Oilwell Varco (NYSE:NOV) shares gained 2.9%, while Noble Corporation (NYSE:NE) gained 1.9%.
The housing sector was one of the major losers on the day today, as investors seemed to question their recent 2 day runup. Toll Brothers (NYSE:TOL) shares lost 5.62%, though the volume wasn't particularly strong. DR Horton (NYSE:DHI) shares fell by 7.31% after the CFO of the company spoke out yesterday saying that there is still far too much inventory in the housing market. Masco Corporation (NYSE:MAS), which is in the home improvement business, fell 5.88% after an analyst reduced their target price on the stock.
The transportation sector was another area of weakness today after FedEx Corporation (NYSE:FDX) disappointed investors with poor earnings projections. Union Pacific Corporation (NYSE:UNP) shares fell by 2.41% in a relatively weak railroad group.
Given all of the headwinds of the day, I believe the stock market held up quite well. Investors need to put this into perspective, we had gained over 400 points in the Dow in the last two days, so a minor selloff isn't bad. The volume was lighter today than it has been the last couple days, which bulls could argue means there is more convinction on the upside, at least for now.
The new highs still outpaced the new lows by an 11 to 7 margin on the NYSE and 2 to 1 on the Nasdaq.
Tommorrow is a triple witching day so watch out for some huge volatility and large swings in the market.
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