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Midday Market Report: Energy Prices Weigh On Consumer Sentiment


Gas prices are hurting our perception of the economy, but factory output is still increasing.

High gas prices contributed to a drop in consumer sentiment in the US, leaving stocks mostly flat today.

Concerns over the sovereign debt crisis in Europe abated and the region's stock markets closed for the week at an eight-month high.
  • The Eurostoxx 50 (^STOXX50E) closed up 0.55% at 2,608.30.
  • The FTSE 100 (^FTSE) fell 0.42%, to 5,965.58.
  • Germany's DAX (^GDAXI) advanced 0.19% to 7,157.82.
Consumer price data released today showed gas prices increased by 6%, accounting for 80% of the 0.4% rise in prices overall. This should come as no surprise to consumers who are paying higher prices at the pump. Gas prices are up 17% since the beginning of the year, dashing consumers' willingness to make big purchases. Inflation, especially gas prices, has become a political hot button, adding to the salience of the issue. The Thomson Reuters/University of Michigan consumer sentiment survey reflected this. The survey said that consumer sentiment dropped one point, surprising experts that predicted a 0.7 point gain.

Stocks in the US were mostly flatlining today.
  • The Dow (^DJI) was unchanged at 13,253.21.
  • The S&P 500 (SPY) extended yesterday's gains by 0.16% to 1,404.89.
  • The Nasdaq (^IXIC) rose 0.05% to 3,057.98.
The Federal Reserve reported that US industrial output stayed flat in February, less than the 0.5% rise expected. Factory output rose 0.3%, slower than the two previous months. Production of electronics and energy equipment increased while auto production cooled down. Utilities were at a standstill and mining activity fell.

A weaker dollar and expectations of increased demand in the US supported oil prices today, pushing WTI futures up 0.60% to $105.74/barrel. Energy companies posted the best, but still modest gains. Transocean LTD (RIG) shares rose 4.5% after being upgraded to a "buy" by Global Hunter Securities. Exxon Mobil (XOM) gained 0.63%.

Shares of Microsoft (MSFT) slumped 0.17% despite being upgraded to a "buy" by Argus. Microsoft has steadily risen 26.33% this year.

The tech world is more occupied with the "nerd Christmas" -- an Apple (AAPL) product release. As crowds line up outside of Apple stores, eager to trade $500 for the newest iPad, Apple shares are up 0.16%, after dipping down in early trading.

Twitter: @vincent_trivett
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