Originally Posted by oldreliable67 "roared back?" You are easily pleased, sir! Unless you are being a bit facetious and I'm just not picking it up! 32.25 is approx. an 0.28% gain. Thats not a "roar" according to my trader's dictionary.

So far this week, the Dow Jones Industrials has avoided breaching Friday's closing low of 11,346.51, as well as the 11,331.62 figure that would mark the start of a Bear market. Tuesday saw the Dow Jones Industrials swing between a gain of 50 points to a loss of more than 166 points before that Index closed up 32.25 points.

Wednesday should feature a host of economic reports ranging from employment data to factory orders. The employment data from the ADP Employment Report and Challenger Job Cut report to be issued prior to the stock market's opening may provide a hint as to whether the stimulative boost from the tax rebates is helping firm up the job market.

Arguably the biggest reports could be the factory orders report and the Energy Information Administration's Petroleum Status Report. Right now, the consensus is for a 0.6% increase in factory orders. Given the recent spate of manufacturing-related data that proved somewhat better than market expectations, it is possible that a factory orders number that merely meets expectations could prove somewhat disappointing. The EIA's report could prove crucial in setting the tone for crude oil trading during the day. At present, the oil market remains on a trend that is biased toward higher prices. As of 11:15 pm EDT, crude oil was trading at $142.08 per barrel.

Should U.S. inventories prove lower than expected, oil could be poised to make a run at both its intraday ($143.67 per barrel) and closing ($140.97 per barrel) records. Given the role the enormous rise in oil prices has played in undermining stock market sentiment, bad news on this front could push the Dow Jones Industrials toward or below its June 27 low.

As the European Central Bank's highly anticipated interest rate hike for Thursday draws closer, that expected development could cast a shadow on currency trading. Hence, any weaker than expected figures in the data to be released on Wednesday could be inclined to push the U.S. dollar lower.

At the same time, attention to that anticipated interest rate hike could cause the markets to place renewed emphasis on inflation, inflation expectations, and the Fed's continuing accommodative monetary policy posture. The bad news coming out of Asia overnight on the inflation front will not be helpful. There, year-over-year inflation rates for June came to 5.5% in South Korea, 8.9% in Thailand, and 11.03% in Indonesia. In all three countries, the year-over-year rate rose strongly. The comparative figures for May were 4.9% in South Korea, 7.6% in Thailand, and 10.38% in Indonesia.

Originally Posted by oldreliable67 [emphasis added] "roared back?" You are easily pleased, sir! Unless you are being a bit facetious and I'm just not picking it up! 32.25 is approx. an 0.28% gain. Thats not a "roar" according to my trader's dictionary. ...

Factory orders rose 0.6% for May. Shipments rose 0.1%, and the ratio of unfilled orders-to-shipments increased somewhat from 5.27 in April to 5.32 in May. Orders for durable goods rose slightly and those for non-durable goods increased by 1.2%.

The Energy Information Administration’s Weekly Petroleum Status Report revealed that U.S. crude oil inventories for the week ended June 27, 2008 decreased by 2.0 million barrels from the previous week. These inventories are now near the lower boundary of their average range for this time of year. Crude oil imports averaged about 10.2 million barrels per day. For the last four weeks, crude oil imports have averaged 10.1 million barrels per day, about 87,000 bbls/day higher than the average for the same period last year.

The Bear Market Begins…

As oil rose to new records, the Dow Jones Industrials fell to 11,215.51. That is its lowest close since the Dow closed at 11,097.87 on August 14, 2006.

To date, the Dow Jones Industrials has now fallen 20.8% from its October 2007 peak of 14,164.53. That exceeds the 20% (11,331.62) threshold required to usher in the start of a Bear market. In inflation-adjusted terms, the Dow is now 24.0% below its peak.

The S&P 500 closed at 1,261.52. That is its lowest close since July 24, 2006 when it closed at 1,260.91. To date, the S&P 500 has now fallen 19.4% from its October 2007 peak of 1,565.15. In inflation-adjusted terms, the S&P 500 is now 22.7% below its peak.

Despite the multitude of economic reports that were released today, including a strong factory orders report, the weekly petroleum data dominated, as I had thought it might. With respect to some of the major reports that could influence today’s trading, I noted last night:

Should U.S. inventories prove lower than expected, oil could be poised to make a run at both its intraday ($143.67 per barrel) and closing ($140.97 per barrel) records. Given the role the enormous rise in oil prices has played in undermining stock market sentiment, bad news on this front could push the Dow Jones Industrials toward or below its June 27 low.

The Energy Information Administration’s Weekly Petroleum Report likely loomed largest in setting the tone for stocks today. Following the report that showed a drop of 2,000,000 barrels in U.S. crude oil inventories for the week ended June 27. Those inventories are now at the lower boundary for their average range for this time of year.

The report also revealed a four-week average for crude oil imports that exceeded that for the same period last year despite the price of crude oil averaging 97.7% ($133.7165 per barrel vs. $67.6520 per barrel in 2007) higher than last year’s figure. Overall, the four-week average for gross crude oil imports of 10.092 million bbls/day was the highest figure since the four weeks ended May 9 when gross imports amounted to 10.204 million bbls/day. If such a trend persists, it could raise questions as to whether demand reduction in the U.S. is sufficient to make a material contribution toward near-term oil price relief. By day’s end, the price of crude oil settled at a record $143.57 per barrel after having reached a record of $143.91 per barrel shortly before the close of open outcry trading on the New York Mercantile Exchange. Shortly afterward, it reached $144.14 per barrel in after hours electronic trading. As oil surged to new records during the middle of the afternoon, a brief stock market rally was squashed and the major indices headed sharply lower.

In addition, as the day wore on, there was growing speculation as to the hawkishness of the European Central Bank’s statement explaining a widely anticipated 25 basis point hike in interest rates. In response, the U.S. dollar steadily retreated against the Euro. A weakening dollar exacerbated the climb in crude oil prices, as the price of oil is denominated in dollars.

Originally Posted by donsutherland1 [left]The Bear Market Begins…

As analysts at Lehman Brothers suggested that Fannie Mae and Freddie Mac may have to raise additional capital totaling as much as $75 billion and San Francisco Federal Reserve President Janet Yellen, typically dovish on inflation, suggested that U.S. monetary policy is now "approaching a crossroads," stocks gave up their early gains. A late rally brought the Dow Jones Industrials back into positive territory after its having been down more than 160 points during the afternoon. However, in the closing minutes of trading, that rally fizzled.

The Dow Jones Industrials closed down 56.58 points to 11,231.96. That is just above its closing low for the year. On July 2, the Dow closed at 11,215.51.

To date, the Dow Jones Industrials has now fallen 20.7% from its October 2007 peak of 14,164.53. In inflation-adjusted terms, the Dow is now 24.0% below its peak.

The S&P 500 closed at 1,252.31. That is its lowest close since July 21, 2006 when it closed at 1,240.29. To date, the S&P 500 has now fallen almost 20.0% from its October 2007 peak of 1,565.15. In inflation-adjusted terms, the S&P 500 is now 23.3% below its peak. The bear market threshold for the S&P 500 is 1,252.12.

The S&P 500 Falls to the Bear…

Even as the other major U.S. stock market indices crumbled into a bear market (20% or more decline from their pre-decline peak), the S&P 500 held barely above bear market territory. No more. Broad-based selling, particularly in the closing hour of trading, sent the stock market sharply lower. As stock prices tumbled, the S&P 500 was dragged into bear market territory.

The Dow Jones Industrials fell to 11,147.44, down 236.77 points. That is its lowest close since the Dow closed at 11,097.87 on August 14, 2006.

To date, the Dow Jones Industrials has now fallen 21.3% from its October 2007 peak of 14,164.53. In inflation-adjusted terms, the Dow is now 24.5% below its peak.

The S&P 500 closed at 1,244.69. That is its lowest close since July 21, 2006 when it closed at 1,240.29. To date, the S&P 500 has now fallen 20.5% from its October 2007 peak of 1,565.15. In inflation-adjusted terms, the S&P 500 is now 23.7% below its peak.

A number of stories helped herd stocks into bear territory.

● This morning, European Central Bank President Jean-Claude Trichet observed that there were early indications that wage trends were becoming inflationary. At Strasbourg, he informed the European Parliament, “…the Governing Council is strongly concerned that price and wage-setting behaviour could add to inflationary pressures through broadly-based second-round effects. First signs are already emerging in some regions of the euro area.” On account of this news, the U.S. dollar weakened relative to the Euro.

● Later in the day, Fitch Ratings indicated that it could downgrade Merrill Lynch’s debt rating. Separately, Fannie Mae announced that it paid a record premium of 74-basis points on its 2-year notes over the comparable maturity Treasury yield. These stories renewed concerns about the battered U.S. financial sector.

Originally Posted by Iriemon Sounds like we have "stagflation" doesn't it? Maybe Bush and some of the conservatives here can explain again how his tax cuts have boosted economic performance and set the stage for stronger sustainable growth, like was being claimed a few years back. And since that's worked so swell, let's cut taxes more! What the heck. The Govt can always borrow more.