Many exchange traded funds (ETFs) have benefited from the record high oil prices. Oil futures and other energy futures increased today on expectations that the Federal Reserve will cut interest rates, reports John Wilen for the Associated Press. The benchmark federal funds rate reduction is likely to support the economy and ensure strong demand for oil and gasoline.
The iShares Dow Jones Transportation Average (IYT) is another ETF besides oil and energy-related funds that can be affected by the price of oil. While oil is up today, IYT is down. Think of moving goods via planes, trains and automobiles: You need gas to move them. As a result, these companies will pay more to move goods. As oil prices rise, remember all those shipping companies. Currently, IYT is up 5.8% year-to-date. However, it is below its long-term trend line (200-day moving average).
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.