Stocks opened the day lower but after amateur hour was over the buying began and the Dow closed up 56 points to 21,875 on heavier trading volume. Events in Houston and North Korea are driving the news cycle but underlying all the drama are good US economic vibes.
With floods hitting Houston harder than Mark McGuire jumping on a Randy Johnson fastball, Denton Cinquegrana, chief oil guru at the Oil Price Information Service noted that Harvey has lowered the US refining capacity by 3 million gallons a day or about one-sixth of total production. The effect of this, according to AAA is a rise in the price of a gallon of gas of about 5% with prospects for a rise of another 10% to 15%. According to Denton, independent gas stations tend to increase prices quicker than stations owned by major oil companies like Exxon or Chevron since they are more prone to supply constraints. While gasoline is getting more expensive the price of oil is dropping. WTI crude fell below $46 per barrel today after giving up 1.3%.
Gold prices have risen thanks to a combination of Harvey’s rains and North Korea’s lobbing of a missile over Japan. PM Abe was rightly upset and called a UN Security Council meeting. Gold went over $1,300 an ounce recently and today traded at $1,313 off a couple of bucks.
Consumer confidence readings taken just prior to Hurricane Harvey hitting Houston (H4) showed the highest level since late 2000 and early 2001. The confidence index, according to Bloomberg rose to a reading of 122.9 well above estimates calling for 120.7. The present conditions measure increased to 151.2 up from 145.4 and the gauge of consumer expectations rose to 104 from 103.