Commodities Explode Higher On Bernanke Stimulus Talk
This morning, the chairman of the Federal Reserve, Ben Bernanke, is testifying in front of the House Financial Services Committee. Chairman Bernanke has hinted that further stimulus could be needed if the market starts to slump. Most of the leading commodity stocks have jumped higher on this news. Copper, steel, iron ore, gold, and silver are soaring higher on this news.
This afternoon, the Federal Reserve released their minutes from the June meeting. Apparently, some voting members from the Federal Reserve suggested that the stock markets needed more stimulus. Well, this Fed rumor lead to a drop in the U.S. Dollar and spike in the major stock market indexes. Obviously, the leading commodity stocks surged higher as soon as the U.S. Dollar Index declined.
It is rather amazing to trade day after day and see how the major stock market indexes such as the S&P 500 Index, and the Dow Jones Industrial Average(DJIA), continue to trade inverse to the U.S. Dollar Index(DXY) virtually tick for tick. When the DXY rallies or bounces higher the major stock indexes simply deflate and trade lower. The opposite effect occurs when the U.S.
All of the major copper stocks are declining sharply lower today with most other leading commodities. The iPath Dow Jones-UBS Copper Subindex Total Return ETN(NYSE:JJC) tracks copper and is declining lower this afternoon by 0.82 cents to $59.01 a share. Often traders and investors will follow copper as a leading indicator for economic growth and expansion.
Copper has long been known as a leading economic barometer for the major stock indexes. Today copper is trading lower on the trading session despite the huge stock market rally in the major stock indexes. This afternoon the iPath Dow Jones UBS Copper ETN(NYSE:JJC) is trading lower by $1.07 to $56.78 a share.