Today's Market Update with...

Harvey Katz, Value Line's Managing Editor

After an up-and-down session for much of the day yesterday, the stock market righted itself late in the aftenoon to close a bit higher. The Dow was the standout, with a gain of 47 points, while the NASDAQ barely budged and the S&P 500 Index gained a mere four points.

The big news was oil, which continues to soar, rising another $2.40 a barrel, on hopes for an improving economy. That seems to be a reasonable expectation and, indeed, the U.S. economy likely grew by 3%, or more, in the recently concluded third quarter. A slightly slower pace of 2%, or so, is our forecast for the fourth quarter. Even so, that should be enough to keep demand for oil high and prices on an ascending curve.

That said, the threat of inflation is growing. True, recent data do not back that up. However, if oil and other commodities continue to rise as they have been, it will be just a matter of time before inflation heats up. And that is never good news.

Meanwhile, third-quarter earnings continue to roll in and, for the most part, they are coming in at or above expectations. Recent examples include JP Morgan Chase, Intel, Goldman Sachs, Google, and IBM.

As for the economy, it, too, is doing reasonably well, with two key data points due out this morning, industrial production and factory usage. Both should be flat to up nominally and not be unsettling to the markets.

Finally, the equity futures are suggesting some early profit taking this morning, before the bulls perhaps try to regroup again. Stay tuned for further updates.