As a follow up to the update we posted about gas last Thursday, here is a snippet from todays Weekly Commentary: You may be enjoying the economic benefits of gas prices around two dollars a gallon, but last week investors were skeptical about the effect of low, low oil prices on companies’ performance during 2015. For the first time since the financial crisis, the price of crude oil dropped under $50 a barrel last week. That’s less than half of its value just six months ago and one of the fastest drops in the past 30 years. Investors weren’t thrilled with the change. The Standard & Poor’s 500 Index (S&P 500) fell, marking the first time the index has moved lower during each of the first three days of a new year since 2005. Barron’s described the effects of lower oil prices like this: In the U.S. alone, oil’s precipitous drop has had a sizable impact on expectations for corporate profits: Analysts have cut their fourth-quarter earnings forecasts for S&P 500 energy stocks by more than a quarter since the end of September while total S&P 500 earnings forecasts have come down by more than 7%... But here’s the thing: Such plunges haven’t been bad for stocks – or the U.S. economy, for that matter. Since 1984, oil has experienced three similar drops and each time the S&P 500 traded higher 12 months later. If you would like to receive the Weekly Commentary email, contact us at sanemone@ruggiewealth . We are confident you will find this email newsletter to be informative and helpful.
Posted on: Mon, 12 Jan 2015 20:07:56 +0000
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