Stocks Hit Another Oil Slick

And so its on again after a few light-volume days that breathed life back into
commodities and brought stocks close to another high for the year, investors
returned to push most assets significantly lower on Wednesday. The Dow Jones
Industrial Average fell 130 points to 12,630, the Nasdaq lost 27 points to 2845
and the S&P 500 slipped 15 points to 1342. Such is the current state of volatile
markets. Oil fell more than 5% to close at just above $98 a barrel, silver shed
more than 8%, and gold lost about 1% all of the three essentially giving up
their gains accrued during a three-day rally. Many observers were pointing to
strength in the dollar as a prime contributor to the commodities selloff and
the subsequent hit on energy and materials equities names. Specifically, some
inflationary concerns out of both China and the U.K. on Wednesday turned out to
be solid news for the greenback, which, despite the multiplying amount of them
out there, benefited from a reality check that certain inflationary concerns may
be more real than those in the U.S. (For now). As youd expect, energy companies
and miners didnt fare well on Wednesday. Freeport McMoRan (NYSE: FCX ), for
example, shed 5.5%. And as weve seen (as early as four days ago), the deflation
of oil and precious metals isnt much of a sail-blower for small-cap stocks. The
Russell 2000 lost 1.7% Its also somewhat worrisome for bulls that large
financial stocks as a whole have once again dropped near their lows for the
year. The SPDR Financial Select Sector (NYSE: XLF ) exchange-traded fund fell
1.4%, and as weve noted in the past, a medium-term downtrend from mid-February
remains very much intact. Whatever happens to the rest of the market on
Thursday, its probably pretty safe money that a fall by the XLF below its 2011
lows would not be a good thing for stocks in the short term. Airlines
outperformed on Thursday US Airways (NYSE: LCC ) gained 5.2% while American
Airlines parent AMR Corp. (NYSE: AMR ) rose 4.6% with the fall in crude getting
the sector back to two-month highs.