Thursday, April 26, 2012

Markets Churn Higher on Absence of Data

There was little to move stocks in either direction today, but the algorithm-driven dynamic kept the same tone as it has pretty much since October and churned higher without any heed to downside risk.

Initial unemployment claims continued to be elevated, coming in at 388K after last week's revised 389K reading. The most positive news was pending home sales for March coming in 4.1% higher, a significant beat of expectations of a mere 0.5% gain.

Otherwise, there were a number of misses on corporate first quarter earnings reports, including UPS (UPS) and Dow Chemical (DD), but that didn't hold back stocks in the least as they started the day slowly and continued higher throughout the session, reaching the highs for the day shortly after 3:00 pm EDT.

There was a slight pullback into the close, but the final figures left the Dow Jones Industrials just 60 points from fresh four-year highs and the S&P 500 closing just two cents shy of 1400, a mark the index has not closed above since April 3rd.

Europe finished mixed, though the gains and losses of the particular exchanges were marginal. As has been the case over the past six to seven months, the absence of any kind of news out of Europe - which has been routinely bad - gives US markets a nudge higher, and such was the case on today's trading.

Analysts are hopeful that the week's gains can be sustained after Friday's first estimate of first quarter 2012 GDP, which will be announced prior to the market open. Market expectations are for somewhere between 2.5% and 3.0% growth, which would not be surprising, given a US economy that is being spoon-fed by government largesse, with more than 45 million Americans on food stamps and millions more receiving some form of government assistance while the Fed continues to dole out money hand over fist through its Operation Twist.

While all this stealth stimulus may be giving stocks a relatively easy time of it, at some point the government will have to deal with the monstrous deficits and the growing underfunding of the entitlement programs.

Being an election year, however, neither congress nor the president will go legislatively within earshot of those issues except in well-rehearsed campaign speeches, so, the current conditions will continue uninterrupted - barring some unforeseen event - until November. On the other hand, the Fed's current easing cycle will end in June, and it will be interesting to note how well the markets handle any lack of support.

Until further notice, it appears to be smooth sailing for stock hawkers, traders and investors. Somewhat counterintuitive, the precious metals had their best showing in weeks, though they remain range-bound.

Dow 13,204.62, +113.90 (0.87%)
NASDAQ 3,050.61, +20.98 (0.69%)
S&P 500 1,399.98, +9.29 (0.67%)
NYSE Composite 8,123.07, +52.29 (0.65%)
NASDAQ Volume 1,722,965,375
NYSE Volume 3,864,227,750
Combined NYSE & NASDAQ Advance - Decline: 3682-1910
Combined NYSE & NASDAQ New highs - New lows: 259-46
WTI crude oil: 104.55, +0.43
Gold: 1,660.50, +18.20
Silver: 31.21, +0.85

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