Markets Extend Rally to Second Day

The domestic market rally continued for another day today. Markets were up as much as 2.5% in trading. The Dow added 369.26 points and closed out the day at 16,654.77. The NASDAQ led the day in gains, climbing 115.17 points to close at 4,812.17. The S&P 500 wasn't far behind in terms of real gains, adding 47.15 points to close ou the trading day at 1987.66.

In overseas trading today, the recovery finally spread. All of the major world indices were up. London's FTSE led in real terms, gaining over 3.5% on the day. The FTSE posted a 220 point gain, and closed out the trading day at 6,192.03.
Hong Kong rallied with a 757 point gain, while Germany gained 330 and Japan brought up the rear with a 200 point gain.

Bond Yields Flat Despite Market Recovery

Yields on 10-year US Treasury bills were flat despite a rallying marketplace. That could signal a slowdown in the recovery, or it might just be a product of the Fed going into their quarterly meeting. Often, the value of the dollar leads the market in terms of ups and downs.

Typically a stronger dollar means that there will be losses on export goods and commodities, while a weaker dollar is a good sign for exporters. Right now, the dollar is one of the stronger world currencies, and investors overseas have been increasing their stake in the dollar as the Euro continues to struggle.

Oil Rallies Above $40

The price of oil finally broke above the $40 support level that it had been stuck under, but that doesn't mean much for long-term value. The price of crude oil has been hesitating while the rest of the market rallies, but that all changed in trading today.

Crude has been falling for 6 weeks in a spiral that analysts are having trouble predicting the bottom of. This latest rise is likely just a dead-cat bounce that we see before prices continue to drop. Still, it was a welcome change for the Energy sector, which is grasping at straws when it comes to signs that the price of crude may turn around.

The Energy Minerals sector rallied along with the price of crude oil today, with many companies posting double digit real gains. Transocean (RIG) and CONSOL energy (CNX) were both up by more than 10%, and Chesapeake Energy Corp (CHK) was right on the line. Unfortunately for all of these companies, none of the fundamentals on the ground have changed, and this latest bump is just due to a fleeting change in the value of crude oil. Expect them to fall back down as the price declines.
Published on Aug 27, 2015
By Aaron Phillips
Aaron Phillips is a financial researcher and journalist based out of Michigan. He regularly writes the IG Daily and IG Weekly columns.

Copyrighted 2016. Content published with author's permission.

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