Oil-Price Rise Throws Wrench into Rally

Thursday offered Exhibit A as to what happens when momentum meets a dose of
economic reality. Closing out a strange month that has seen the Dow Jones
Industrial Average rise nearly 7% while oil prices jumped over 8%, stocks
slipped on Thursday as the highest crude prices in two-and-a-half years gave
investors pause. The Dow fell 31 points to 12,320 while the S&P 500 dropped 2
points to 1326. Oil settled at $106.72 a jump of 2.5%. Still, the framework that
has comprised the latest rally in stocks was still present on Thursday. The
Nasdaq outperformed, managing a small gain of 4 points to 2781. Small-caps,
meanwhile, added another 0.4% (as per the Russell 2000) after setting a new
three-and-a-half year high on Wednesday. And, lets face it this was barely a
down day in stocks. The Dow Jones Total Stock Market Index fell just 0.1% and
advancers outnumbered decliners on the New York Stock Exchange by a margin of
about 3-to-2. But the weight of the large-caps tilted the margin away from the
bulls. Only seven of the Dows 30 components finished in the green, and modest
givebacks in shares of American Express (NYSE: AXP ), Intel (NASDAQ: INTC ) and
Home Depot (NYSE: HD ) helped to pull the index lower. Financials, in fact, were
not biting all day, with the Financial Select Sector SPDR (NYSE: XLF )
exchange-traded fund slipping 0.4%. As the flavor of the two-week rally in
stocks has decidedly been of the small-cap/tech/energy stock variety, its
helpful to remember the XLF is still 5% below its high for 2011, suggesting
fundamentals have not been at the forefront of the collective investing mind
lately. Other stock sectors were more clearly affected by the rise in oil.
Airline stocks, which had enjoyed a mild runup in the wake of moderating crude
prices, fell 2.2%. Gambling stocks also fell, presumably on the expected impact
on personal travel. Las Vegas Sands (NYSE: LVS ) ended 2.9% lower. Although
signs this week suggest a positive jobs report on Friday, its worth remembering
that a move toward $110 oil isnt much help for those with or without a job.