Midday Market Update: Rally Continues on Optimistic Economic Outlook
June 19th 2009 at 10:00am by Tom Lydon
U.S. stocks and exchange traded funds (ETFs) extended their rally so far today, suggesting that the economy might be in better shape than previously anticipated and that the recession may be coming to an end.
In an attempt to ignite a much-needed spark in a battered automotive industry, the government is offering consumers incentives of up to $4,500 to turn in their old gas-guzzling vehicles for new more fuel-efficient ones. The way the program works is if one trades in a vehicle that gives 18 miles per gallon or less, a voucher for $3,500 will be given. If an older model is traded in for one that gives 10 miles per gallon, a voucher for $4,500 will be given, states Ken Thomas for the Associated Press. Critics of the program state that many consumers are still wary of taking on new or higher car payments, and they’re skeptical that it will work.
Crude oil rose once again to surpass the $72/barrel mark. The commodity was trading at $72.14/barrel by mid-morning on the New York Mercantile Exchange. The relative strength of black gold has been reinforced by investor’s fear of inflation and the risk factors in Nigeria and Iran. The United States Oil Fund (USO) jumped 0.6% in morning trading.
Drug maker Novartis (NVS) received uplifting news from the FDA as they approved the sale of its drug, Illaris, which is used to focus on genetic triggers that cause diseases. The news sent the iShares MSCI Switzerland Index (EWL) up nearly 1.7% in intraday trading, however, it is down 4.7% year-to-date ; NVS is 11.7%.
Auto retailer, Carmax Inc. (KMX) reported a drop in first quarter profit of 2.7% on huge sales drops, a loss in its auto financing arn and charges related to loans. However, the adjusted earnings of $0.22/share that the company reported were well above Wall Street’s expectations of $0.04/share, which was the result of increased traffic and better sales execution.
Overall, all three major U.S. indexes are up in morning trading. The Dow Jones Industrial Average added 0.5%, the S&P 500 added nearly 0.7% and the Nasdaq was up 1.5%.
For more stories on crude oil, visit our crude oil category.
Kevin Grewal contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.