News Column

Daily Wrap: Gold shines, while stocks sit; Arch boss talks up coal

June 19, 2014

By Jim Gallagher, St. Louis Post-Dispatch

June 19--TODAY'S INDEXES -- Dow Industrials 16,921 +15

S&P 500 1959 +2

Nasdaq 4359 -4

GOLD GLITTERS: Gold jumped 3.3 percent today as the Fed's soothing words on interest rates pushed the U.S. dollar down and sent investors hunting for an alternative.

Fed Chairwoman Janet Yellen on Wednesday said she expects interest rates to stay low for a "considerable time." Low rates are bearish for the buck, and gold is often seen as an alternative currency.

The stock market spent the day in Dullsville, with the Dow Jones Industrial Average gaining 0.09 percent, the S&P up 0.08 percent and the NASDAQ down 0.08 percent.

ANALYST INSIGHT: People at Stifel Nicolaus & Co., the St. Louis brokerage, heard the sound of doves cooing in the Fed's Wednesday pronouncement on the economy. "We think this is a seriously dovish statement from the Federal Reserve and that the Fed is willing to accept inflation well above 2 percent before any action will be taken. The overall broader markets are sniffing that out," Stifel money manager Chad Morganlander said in a Bloomberg interview.

MARKETS GET MELLOW: Relax. Chill out. We're is a no-stress zone in the financial markets.

So says the Federal Reserve Bank of St. Louis.

The St. Louis Fed Financial Stress Index fell to an all-time low for the second time in three weeks for the week ending last Friday.

The index measured -1.303, down modestly from the previous week's -1.264. Zero means a normal amount of stress in the financial markets. A negative number means less stress. Last week's number was the market on Valium.

The sleepy reading supports other indicators such as the VIX, the stock market's so-called fear gauge. which is also showing a mellow market.

The Fed's index measures 18 stress indicators, mainly interest rates and spreads and the performance of bonds and financial stocks.

TALKING UP COAL: Arch Coal CEO John Eaves may have gabbed his stock higher today. Speaking to analysts in New York, he predicted that 90 percent of Powder River Basin coal used in electricity will survive the effects of the Obama Administration's new carbon limits.

He noted that new scrubbers at power plants allow utilities to burn Powder River coal.

The Powder River Basin in Wyoming is home to major surface mines for Arch and its competitor, Peabody Energy. Both companies are based in the area -- Arch in Creve Coeur and Peabody in downtown St. Louis.

Arch's stock rose 3.1 percent today. Peabody's was up 1.1 percent.

OPEC SHMOPEC. WHO CARES? For a good example of how world energy markets have changed, take a look at gasoline prices today.

Iraq, OPEC's second largest producer, has broken out in civil war -- with an Al Qaeda-like group winning. And what's happened to gasoline prices? They are up 2 percent in St. Louis over the last month, and less than 1 percent nationally.

Now look back at 1990, after Iraq invaded in Kuwait and America prepared to invade. Gasoline prices rose 37 percent.

Gasoline on the Missouri side of the St. Louis area was selling at an average of $3.64 today, up from $3.56 a month ago. It was $3.82 in Metro East today, up from $3.74 a month ago.

LOCAL INDEX: The Bloomberg St. Louis Index was flat today at 912.


Viasystems 7.0% Build-A-Bear -2.5%

Allied Healthcare 3.7% LMI Aerospace -2.4%

Isle of Capri 3.5% Stereotaxis -2.5%

Jim Gallagher is a reporter for the Post-Dispatch


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Source: St. Louis Post-Dispatch (MO)

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