Late in the New York trading session, the Dow was trading up 038% at 14,832, led higher by Chevron and Exxon Mobil. Worries over the situation in Syria have caused oil prices to surge and that in turn is propelling energy companies higher.
If the Dow finishes up today it will be the first time this week that the index has managed to finish in positive territory. Some of today’s bounce will be a reaction to the steepness with which the stock market has fallen over the past two days, as investors begin to spot value among the depressed stock prices.
A US attack on Syria has the potential to cause deep economic ramifications, but there will be market participants who view it as a transitory event as far as the stock market is concerned and therefore judge the automatic sell response as a buying opportunity.
We saw earlier today that the National Association of Realtors’ pending home sale index dropped 1.3% in July, which is not the first sign of softness in an area of the economy that is especially responsive to interest rates. After the big decline in durable goods orders seen at the beginning of the week, and now with worries over the Middle East battering the stock market and elevating energy prices, the arguments seem to be building that now is not a particularly appropriate time for the Fed to start reducing their monetary stimulus.
We have jobless claims data tomorrow, and another estimate of second-quarter US GDP, which may shed further light on the subject.