Financial shares climbed after Federal Reserve Chairman Ben Bernanke said in a speech that the U.S. central bank may extend emergency lending facilities for big Wall Street banks past year-end, showing the Fed is determined to stop the housing-inspired credit crisis from wreaking further havoc in the economy.
The financial sector was up 6.07%.
There was also a big drop in oil:
Crude oil fell more than $5 a barrel, the biggest decline in three months, as signs that the global economy may slow prompted investors to sell commodities.
Oil in New York has dropped more than $9 since reaching a record $145.85 a barrel on July 3. Gold, silver, copper and corn also declined. The U.S. economy has sagged amid credit-market and housing slides. Contracts to buy previously owned homes fell more than forecast in May, signaling prices have yet to bottom.
``All the bad economic news is making people take a second look at commodities,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Commodities were purchased as a hedge against inflation. A global recession is looking more likely, and it's the greatest weapon in the fight against inflation.''
As to whether or not this is the beginning of a trend has yet to be seen. Remember that oil has been rallying for the better part of a year; two days of strong profit taking don't change that. However, this is a good start. Let's go to the charts:
Let's pull back a touch and look at two days worth of price action. First, remember that yesterday he had a really big sell-off. Today that sell-off consolidated in a triangle pattern that lasted for most of the day. What's important here is the market didn't do much of anything until it broke through upside resistance about 1:30 PM CST. Then it was Katy bar the door. Prices advanced smartly on strong volume. Also note that prices are about where they were at the start of trading yesterday. That means we're about even for the week.
There is still a very bearish orientation to the daily chart. However, also notice that over the last few days we've had very strong volume and today we printed a really strong bullish bar. In other words, the last 4-6 days are looking like a reversal. But, nothing is set in stone.
