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DOW + 40 = 17,687
SPX + 10 = 2051
NAS + 31 = 4702
10 YR YLD – .02 = 2.32%
OIL – 1.34 = 74.32
GOLD + 9.80 = 1198.00
SILV + .07 = 16.31
Record highs for the Dow Jones Industrial Average (26th of 2014) and the S&P 500 Index (43rd of the year). While there are plenty of reasons for concern, the major stock indices have been climbing a wall of worry. Today, health care stocks pulled the market higher.
Wholesale prices in the US increased in October as higher costs for services and food outweighed a slump in energy. The Producer Price Index was up 0.2% compared to a 0.1% drop in September. Wholesale prices excluding food and energy rose 0.4 percent after no change a month earlier. Compared with 12 months earlier, producer prices rose 1.5% and the core index increased 1.8 percent in the year ended October. Prices for goods dropped 0.4 percent last month, the most since April 2013. Energy costs decreased 3 percent last month, the biggest decline since March 2013. Wholesale food costs climbed 1 percent as prices of vegetables, eggs and meats increased. The cost of services increased 0.5 percent in October, and this is a major reason why the overall index was higher. Now normally services don’t jump that much. What happened?
The nationwide average price of a gallon of regular unleaded gas was $2.89 on Nov. 16, its lowest level since the end of 2010. Oil prices have been falling fast but gas prices, the price at the pump, has not dropped as fast; there was a lag. At gas stations and other retail fuel vendors alone, margins jumped 26.1 percent, the most in more than four years; and that showed up in the inflation report under “cost of services”. It looks fairly clear that if gas stations had passed on lower prices faster, there would have been little of no increase in the PPI.
Gas stations aren’t the only ones who are refusing to pass along savings from lower fuel prices. In the 12-month period ending in September, U.S. airlines burned through nearly 16.2 billion gallons of fuel. They paid an average of $2.97 a gallon, down from $3.07 the prior year. That 10-cent drop saved the industry $1.6 billion. Fuel prices have since fallen further. United Airlines estimates it will pay $2.76 to $2.81 a gallon during the last three months of the year.
