Traders-Blog.com

The Dow hit its lowest point in since May 2003, 21 months ago, today due to a spike in crude prices. After plummeting 174.02 points, the Dow finally closed this afternoon at 10,611.20. The Nasdaq also lost 28.30 points today to close at 2,030.32, while the S&P lost 17.43 points and closed at 1,184.16.

All but one of the Dow components fell into the red today as stocks tumbled. Only Verizon Communications made small gains within the Dow today. Crude futures for March gained $2.14 to reach $51.15 per barrel, while the April crude futures reached $51.42 after rising $2.41 on the New York Mercantile Exchange. According to Robert Pavlik, a portfolio manager at Oaktree Asset Management, the market just gave up after watching crude rise above $51 and decided not to wait for tomorrow’s CPI numbers but get out while there were still profits to be had.

In addition to concerns over the price of crude, investors struggled with concern over the value of the dollar. The dollar slid 1.5 percent against the euro to $1.3255 and fell 1.3 percent against the Japanese yen at 104.09 yen after South Korea’s central bank announced that they would sell a portion of its dollar reserves in order to receive higher returns. Additionally, there was talk that some oil revenue might be switched from dollars to euros.

Home Depot, the Atlanta-based home improvement retailer, announced today that earnings had increased by 10% in the last quarter. Many of their earnings came from modernizing older stores and building new stores. Last quarter, sales rose 11% to reach $16.81 billion from last year’s $15.13 billion. Although the company’s earnings met analyst expectations, the shares lost 4.1%, trading $1.74 less and closed at $40.28.

Besides Home Depot, the other major loser of the day was Merck. After last week’s news that Vioxx might be able to go back on shelves, the company saw an increase in the price of stocks. However, today the stock lost over 4% this afternoon as the stock closed at $40.28. Investors hope that tomorrow will be a new day for Merck and the rest of the market.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter