Those hoping that the correlation between stocks and oil prices would dissipate are becoming disappointed, as the continuing decline in oil prices seems to be weighing on the stock market. We’ve mentioned a few times now that while falling oil prices might be good for main street America, stocks might struggle as the deterioration of an asset class tends to spill over into stocks. Remember, 2007 and 2008 as mortgage backed securities collapsed, stocks were drawn into the mess as leveraged players sought out liquidity. Again, I’m not saying stocks can’t go up at this point, but if oil prices keep falling, the bull’s task will be much more difficult.
As for today, the Dow Jones Industrial Average was down 96 points to close at 17,640. The S&P 500 was down 16 points to finish the day at 2028. Gold was up $17 to trade at $1233 per ounce, while oil was down $2.38 to trade at $45.98 per barrel WTI.
We do get some economic data this week, namely retail sales on Wednesday, weekly jobless claims on Thursday, and CPI and Industrial Production on Friday, but traders will focus mainly on the start of earnings season. We’ll let you know how the earnings parade unfolds over the next couple of weeks. Stay tuned.
Have a nice evening everyone.