The stock market and oil prices have both made noted adjustments following news that Osama bin Laden was killed by U.S. forces on Sunday night. Investors, reacting favorably to the news issued by President Barack Obama, responded with a reasonable increase in shares and noted slip in crude prices.
Bin Laden’s Death Prompts Stock Reactions
With news that bin Laden was dead, stocks opened solidly higher on Monday. The long sought-after founder and leader of al Qaeda was killed by U.S. forces in Abbottabad, north of the Pakistani capital Islamabad.
Following an address to the nation by Obama, calling his death “the most significant achievement to date in our nation’s effort to defeat al Qaeda,” investors rejoiced with a solid response in the market.
In early trading, the Dow Jones industrial average rose 56 points (0.5 percent), the S&P 500 climbed 5 points (0.4 percent) and the Nasdaq Composite gained 8 points (0.3 percent).
While stocks have responded well to the news, experts say bin Laden’s death is not enough to sustain a long rally. This was seen with the quick drop and rise of oil prices.
Oil Prices Drop then Increase Following News
Shortly after the al Qaeda news, oil prices retreated with crude for June delivery dropping 67 cents to $113.28 a barrel.
As noted by Derek Hoffman, chief executive and found of Wall St. Cheat Sheet, in an interview with CNN Money, “Oil can be a globally emotional, reactive market and any time that geopolitical risk is reduced there is less fear in the oil markets.” This explains why investors reacted quickly to the news.
However, the drop didn’t last long.
By mid-morning, the declines were erased by an increase of 40 cents (0.3 percent) in crude for June delivery to $114.33 a barrel. National security concerns and terrorist threats are believed to have created immediate concerns in investors as they worried about potential supply disruptions.
Some think that the possibility of violence erupting in the Middle East is great from those seeking retribution for bin Laden’s death. In addition to inherent dangers associated with terrorist threats, violence could mean less oil will be available. As a result, gas prices, which have already reached $4 a gallon in some areas, could increase even more.
