The markets surged higher today on the back of weaker oil and strong economic news. Wall Street seems to have put the problems in the Middle East on the back burner as no new issues appear to be plaguing the region. The United States Oil Fund LP (NYSE:USO) is trading at $40.99, -0.40 (-0.97%). In addition the weaker oil, Jobless Claims dropped dramatically to 368,000. That is another 20,000 drop for the weak and the lowest number in two and a half years. At 10:00am ET, ISM Services were reported which also beat expectations. The U.S. February ISM Services Index was reported at 59.7% vs. 54.9% January. All this positive economic news is helping the markets have a strong day. Large gains are showing up across the board in the markets. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $133.03, +1.82 (+1.39%) while the SPDR Dow Jones Industrial Average ETF (NYSE:DIA) finds itself at $122.08, +1.63 (+1.35%).
While the markets are having a big up day, Non Farm Payrolls are expected tomorrow at 8:30am ET. This number should be around 200,000. While a positive number would show a growing and recovering economy, the markets are likely to get worried about higher interest rates and slowing fiscal support by the Federal Reserve. It seems strange to say, but the markets may not be insanely thrilled with continued super strong economic data if it causes the 10 year to move to four percent and the Federal Reserve to halt QE-2.
The next few weeks are going to be extremely interesting for the markets. Not only does the market have to continue to watch the Middle East, but here in the United States, the markets will start paying very close attention to words from the Federal Reserve and interest rates. The easy period of market growth is over, now comes the harder part. The easy part was the constant propping and flood of money by the Federal Reserve. The hard part will be when their support stops. Rates will start to increase more and more. Inflation is likely to bubble up. Stay tuned folks, it is going to be a very interesting news few months.