Stock Market Analysis: Keys Of The Day
The markets are struggling again on the back of a stronger U.S. Dollar. This is pushing commodities like oil sharply lower. In addition, demand fears are hurting technology stocks again today as countries like Greece and Ireland look to need another bailout. With the European issues, the Euro is falling. That action is strengthening the Dollar. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $21.65, +0.03 (+0.14%) while the CurrencyShares Euro Trust (NYSE:FXE) trades flat on the day.
An underlying fear has crept into the markets over the end of QE2 and the ability for the world to fully recover with Europe in such dire shape. The recent surge in commodity prices only put more pressure on the global economic picture with food and energy prices sucking discretionary income that could have been spent on other things. Inflation is beginning to creep up as well, will the Federal Reserve raise interest rates to curb inflation?
Today, the markets are also reeling from Hewlett-Packard Company (NYSE:HPQ) after comments about a "tough" quarter signaled trouble in large cap technology. Recently, Cisco Systems, Inc. (NASDAQ:CSCO) posted earning and comments that did not lighten the mood on Wall Street either.
If the markets are going to turn around by the end of options expiration week, the Dollar must start to drop. If the Dollar drops, it is most likely due to a slight change in view on Europe. If that happens, then the demand outlook should bring the markets up for all sectors.