Thursday, February 6, 2014

Stocks March Higher Despite NFP Uncertainty

Stocks staged an enormous rally Thursday, just a day before crucial non-farm payroll data from January is to be released.

Friday's employment numbers - expected to be in the range of 185,000 - stand in stark contradiction to December's paltry 74,000 jobs created. While weather has been roundly blamed for everything from auto sales to bond rallies, it may turn out that the weather will not affect payroll data, as the survey week was one that did not contain a severe weather event.

Investors may be gaming the number, figuring that December's figures will almost certainly be upgraded and the potential for two straight disappointments are slim.

On the other hand, since there was little in the way of news or earnings releases to juice today's rally, the huge run-up in stocks may have been due primarily to short-covering, as the bears - fairly fat and sassy of late - may want to be out of the way of such a volatile data set on Friday morning.

In the meantime, nothing much has changed on a global outlook. In fact, a failed bond auction in Ukraine set off some alarm bells and currency issues remain from India to Brazil to Turkey to Argentina to Indonesia. In essence, the Fed's decision to trim $20 billion in total from their monthly bond-purchasing program over the past two months is affecting everyone, everywhere.

That message did not seem to reach the ears of the bulls, at least for one day. Stocks had fallen pretty far in a short period of time, so the old "oversold" rationale has been trotted out as an explanation. For the record, the S&P had fallen about 100 points in just over a month, so, some giveback was to be expected. Same with the Dow, which had surrendered over 1000 points before gaining back about 250 this week.

On the day, volume was light, the advance-decline line was nearly 3:1 positive, but new highs just barely edged new lows, despite the huge, broad-based ramp in stocks. It appeared to be more of a "risk-off" kind of day rather than a serious, fundamental-based rally.

The 10-year note was sold off, registering a yield of 2.70, the highest in over a week. The troubling trend in short-dated maturities remained unresolved, with 3-month and 6-month bills matching up with identical 0.07% yields.

DOW 15,628.53, +188.30 (+1.22%)
NASDAQ 4,057.12, +45.57 (+1.14%)
S&P 1,773.43, +21.79 (+1.24%)
10-Yr Note 100.41, +0.20 (+0.20%) Yield: 2.70%
NASDAQ Volume 1.78 Bil
NYSE Volume 3.77 Bil
Combined NYSE & NASDAQ Advance - Decline: 4003-1691
Combined NYSE & NASDAQ New highs - New lows: 86-70
WTI crude oil: 97.84, +0.46
Gold: 1,257.20, +0.30
Silver: 19.93, +0.123
Corn: 443.00, -0.25

No comments: