The S&P 500 played jump rope with investor expectations on Tuesday, moving beyond its highest close since 2008 only to fall back down because of economic concerns over rising crude oil prices.
Stocks originally rose from approval of Greece's bailout. Then Iran said it stopped selling crude to France and Britain, and the impact of higher energy prices in the U.S. and developing nations heightened investor concerns. Bloomberg reports that as of 4 p.m. on Tuesday, eight stocks fell for every five rising on U.S. exchanges.
The Dow Jones Transportation Average (TRAN), a proxy for economic growth, fell 1.5%, led by United Continental Holdings (down 9.11%), Jetblue Airways (down 8.78%), and Delta Air Lines (down 7.20%) due to concerns over fuel prices.
Since the S&P bottomed out in October, it has climbed 24%, the Dow has risen by 22%, and more than $3 trillion has been restored to the equity markets. Investors who are hesitant of the market are starting to admit it does look attractive.
Adding to investors' incentive, according to Bloomberg, the "S&P 500 is approaching the cheapest level ever compared with bonds as Federal Reserve Chairman Ben S. Bernanke's zero-percent interest rates drive investors and companies from cash."
Low interest rates mean savers aren't getting a profitable return, so they will seek to put their money elsewhere. Stocks are a natural option. As investors who were originally hesitant to reinvest now reenter the market, we may start to see prices rise.
Business section: Investing ideas
The S&P 500 index has rallied quite nicely since the New Year. Do you think it will continue to do so or will trouble in Europe and the Middle East halt its success? Could we be facing a bull market?
In the case of a bull market, we were curious to see what companies are already rallying but are expected to continue outperforming in the coming months.
For ideas we created a list of the top 200 S&P 500 performers year to date and screened for positive sentiment from institutional buyers and short sellers.
Do you agree with their optimism? (Click here to access free, interactive tools to analyze these ideas.)
1. Micron Technology
3. J. C. Penney Company
5. Starwood Hotels & Resorts Worldwide
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Institutional data sourced from Fidelity, short data sourced from Yahoo! Finance.
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