Stock Rebound Isn’t Quite a Rally

tdp2664
InvestorPlace
Mix one part oil-price rise with one part low-volume Friday, and you have plenty of room for another speculative push higher in stocks. Not much of one, mind you, as tech stocks, especially of the large-cap variety, were sitting this rally out, spooked by a rare (in fact, has it ever happened?) miss by Google (NASDAQ: GOOG ). All told, the Dow Jones Industrial Average gained 57 points to 12,342, the Nasdaq rose 4 points to 2765 and the S&P 500 added 5 points to 1320. Away from the large-caps, the bigger story was a return to favor of small-caps — the Russell 2000 Index rose 0.9%. Yet you can’t really beat oil prices — aside from the repeatable new highs in gold and silver — for a taste of both the present and the future of financial markets. The bullishness that one can glean from oil prices moving higher — that over the long term it must represent some sort of sustainable global demand — will have its built-in limits. And the last one came as crude approached $110 a barrel, as you’ll remember the retreat from that peak a week ago coincided with one in stocks. While a pullback in auto stocks makes sense — General Motors (NYSE: GM ) slipped 1.1% — one can’t help notice that the market was about 1% or so higher than it is now when crude prices contributed to stocks selling off by about 2%. As it was a dubious development when the rally two weeks ago couldn’t quite reach the 2011 highs set in late February (on the S&P 500), it won’t necessarily be a good sign if those April highs become the new ceiling for stocks. A steady diet of earnings reports over the next month may have a lot to do with that, naturally, but it’s funny, bond traders didn’t need to hear from Apple (NASDAQ: AAPL ) to take the 10-year note yield back to its lowest levels of the month on Friday. With stocks looking more uncertain that they can do much in the near term to improve on their 5% gain in 2011, a 3.4% Treasury yield will become even more attractive.