HEDGE CLIPPINGS:

Stock Market Rally Fueled by Cheaper Oil (Richard Satran, 12/04/04, Reuters)

Oil is still king on Wall Street -- and if you don't believe it, just take a look at this year's stock market charts.

Stocks have been climbing sharply since the end of October when oil began its 20 percent decline from $55 to below $43.

The major stock averages have climbed sharply during that time frame. The Dow industrial average hit a year's low of 9,708 on Oct. 25 and is up 10 percent since then. The Standard & Poor's 500 hit its highest level in three years this week.

Some analysts have long suspected that oil was getting too expensive based on pure supply-and-demand concerns. Inventories have been building for months but oil was hovering above $50.

The reason oil kept rising, they say, is that "herd investing" took over. Fast-moving hedge funds have been playing in the oil patch much of the year. Recently, those funds have dumped oil and poured back into stocks.

"The fundamentals didn't appear to justify $50 oil," said Christine Callies, chief market strategist for Bessemer Trust. "A lot of the move upward appeared to be technical."

Lest anyone believe markets rational.

Posted by Orrin Judd at December 4, 2004 4:50 PM