Markets Gain as Crude Sinks

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Published March 11, 2011

| FOXBusiness

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Stocks were solidly in the green Friday afternoon as retreating crude prices outweighed concerns over the economic impact of the massive earthquake that shook Japan earlier in the day. 

Today's Markets 

As of 2:39 p.m. ET, the Dow Jones Industrial Average was higher by 51 points, or 0.42%, to 12035, the S&P 500 was up 8.4 points, or 0.64%, to 1303 and the Nasdaq Composite was higher by 12.9 points, or 0.48%, to 2713. The FOX 50 edged higher by 4.6 points to 926. 

Oil prices, which have been a major component in driving equities markets in recent sessions, plummeted to as low as $99.01 as the "day of rage" protests in oil-giant Saudi Arabia were sporadic and mostly peaceful. 

"There were built in expectations of the maelstrom of discontent in Persian gulf" that didn't materialize, said  Tom Kloza, chief oil analyst at the Oil Price Information Service. 

Light, sweet crude slipped $1.54, or 1.5%, to $101.16 a barrel. The price consumers pay at the pump keeps creeping higher, with the average price for a gallon of regular hitting the $3.54 a gallon mark, up from $3.12 a week ago, according to the AAA Fuel Gauge Report. 

Traders were also mulling the potential economic impact of the 8.9 magnitude earthquake that slammed Japan, dealing a significant blow to the country, which is the third largest economy in the world. 

The U.S. market "response [to the earthquake] will be more muted than anything else because it should not have an impact on our equity performance," said Peter Kenny, managing director at Knight Capital Group.

Several major Japanese companies, including Toyota (TM), Honda (HMC) and Sony (SNE), have had to close factories as a result of damage caused by the quake, according to media reports. 

The earthquake can "upset the country's nascent economic recovery while exacerbating the country's ballooning public debt issues, as spending by the Tokyo government will surge to meet emergency response costs," according to a research report by IHS Global Insight. 

The Japanese Nikkei tumbled 1.7% to its lowest level in five weeks, following the 8.9 magnitude earthquake that hit near Tokyo. The quake was the most powerful on record for Japan.

Shares of global re-insurance companies, such as PartnerRe (PRE), Everest Re (RE), and Berkshire Hathaway (NYSE:BRK.A) subsidiary General Re, which protect insurance companies against catastrophic liabilities, tumbled amid concerns about how much exposure they have to the Japanese market. 

On the economic front, retail sales jumped 1% in February after increasing 0.3% in January, according to the Commerce Department. The report was inline with economists' expectations. 

Consumer confidence plunged to 68.2 in early March from 77.5 in late-February, according to a Thomson Reuters/University of Michigan survey.  Economists were expecting the index to inch lower to 76. 

In currencies, the U.S. dollar sunk 1.3% against the Yen as traders expect Japanese to sell foreign assets to pay for emergency operations and clean-up, driving the value of the greenback vis-a-vis the Yen lower. 

Gold was up $9.30, or 0.66%, to $1421 a troy ounce. However, gold slid 0.47% on the week, ending a five week winning streak.  

Corporate Movers 

American International Group (AIG) has offered to buy back its Maiden Lane II subprime bond portfolio for $15.7 billion from the New York Federal Reserve.  The Fed initially bought the subprime assets in a bid to help prop-up the insurance giant in 2008. 

Google (GOOG) is looking to hire 200 employees to support its YouTube video streaming service. 

Aeroposatle (ARO) posted its fourth-quarter profits dropped 13% to 98 cents a share, narrowly missing analysts' estimates.  Shares of the teen-clothing retailer were lower by more than 7% in early trading. 

Aflac (AFL) shares were off as much as 2% on concerns about the insurer's presence in Japan. 

Apple's (AAPL) second revision of its popular iPad goes on sale Friday. 

Foreign Markets

Asian markets dipped after the earthquake in Japan.  The quake occurred very close to the end of trading in the country, and Nikkei futures recently tumbled nearly 3% since the market closed. 

The Japanese Nikkei 225 closed lower by 1.7% to 10,254 and the Chinese Hang Seng sold off by 1.6% to 23,249. 

In Europe, the English FTSE 100 was lower by 0.27% to 5,829, the French CAC 40 was off 0.68% to 3,937 and the German DAX slumped 1.2% to 6,983. 

 

URL

http://www.foxbusiness.com/markets/2011/03/11/futures-slip-quake-slams-japan/