Commodities and The World
There are notable shifts occurring in the stock market on the dollar rally/commodities drop this week.
1) lower oil trading has been a notable help to retailers and airlines
2) lower commodity costs in general, from copper to grains to plastics, have been a big help to consumer and material stocks, many of whom have bitterly complained of rising raw material costs
3)A commodity broker the dollar rally has helped small cap stocks. Again today the Russell 2000, the main small cap index, is outperforming the S&P 500. In fact, since the dollar hit its recent low (July 15, the market bottom), the Russell 2000 has rallied 10 percent, while the S&P 500 is up only 5.6 percent.
Why small caps? They are not dependent on exports to grow, as multinationals are. The strong dollar makes exports more expensive and less competitive.
As for the large caps, modest rallies in airlines, autos, and retailers is to be expected on the lower commodities, particularly oil.
