Markets
KMX

Oil Prices Keep Worry in the Air

Various market performance charts

Friday, December 18, 2015

The major indexes are on track to start today's session in weak territory, building on an oil-inspired Thursday sell-off.

Investors found their peace with the Fed, with the rate hike reassuring the economy's health. But declining oil prices have exactly the opposite effect, with the latest leg down in oil prices adding to anxieties about the high-yield bond market. This issue stokes fears of a major credit market crisis along the lines of what we experienced as a result of the housing bust in 2008.

As we have stated in this space in recent days, the credit market problem is restricted to cash flow issues with borrowers in the energy and broader mining space. Recent dividend cuts from Kinder Morgan ( KMI ) and Freeport-McMoRan ( FCX ) as a way to conserve cash confirm the mining space's problems. Some adjacent industries that supply to the energy and mining spaces will likely get caught up in the high-yield scare, but most of the other industries appear to have healthy balance sheets.

Beyond oil prices, we got positive quarterly results this morning from Darden ( DRI ), while CarMax ( KMX ) came short of estimates. The restaurant chain came out with improving comps and margins and a raised guidance for the year. Lennar ( LEN ) beat estimates on the back of strength in new orders and deliveries.

Sheraz Mian

Director of Research

Note: In addition to this daily pre-open article about the market, economy, and the corporate earnings picture, Sheraz Mian also provides detailed earnings analysis in his weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz Mian publishes a new article, please click here .

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

KINDER MORGAN (KMI): Free Stock Analysis Report

FREEPT MC COP-B (FCX): Free Stock Analysis Report

DARDEN RESTRNT (DRI): Free Stock Analysis Report

CARMAX GP (CC) (KMX): Free Stock Analysis Report

LENNAR CORP -A (LEN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

KMX KMI LEN FCX DRI

Other Topics

Stocks US Markets

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More