Stocks rose for the third consecutive day, nearly erasing the declines from the previous Friday and this Monday, as investors shrugged off persistently high unemployment numbers and focused instead on economic data that showed a slow but steady pattern of recovery for US businesses.
The markets were somewhat blind-sided by new unemployment claims prior to the opening. At 576,000 for the most recent week, new claims were higher than expected and worse than the 561,000 reported the week earlier. That did not spoil the mood on Wall St., however, as stocks raced to early gains and added to them as a report on leading economic indicators registered a fourth straight monthly increase of 0.7% for July. As that report was passing the wires, the Philadelphia Fed Index came in above expectations, with an increase to 4.2, up sharply from -7.5 in July and well ahead of mostly dour expectations.
Without earnings driving the market currently, it has been a steady stream of economic data that has buoyed markets of late. Though the news hasn't been earth-shattering or jaw-dropping, it's about as good as it can get, considering the dire circumstances which investors faced in months prior.
Options expiration, which occurs on Friday, had some impact, as surely some of those with gains converted into actual shares as the strike date neared. Often the culprit for volatility, the options trade has been somewhat tame over the past six to eight months. Shying from the outright risk of losing everything, many options players have scaled back their efforts or employed straddles or other methodologies to ameliorate risk and eliminate losses.
Should there be nothing in the way of outright "bad" news on the morrow, all of the major indices are set to record another positive week. The key number to watch for on Friday is the July Existing Home Sales report, due out at 10:00 am. Expectations are for 5 million homes to have been sold in the month, which would be a modest, but sustained, increase from June's 4.89 million.
Dow 9,350.05, +70.89 (0.76%)
Nasdaq 1,989.22, +19.98 (1.01%)
S&P 500 1,007.37, +10.91 (1.09%)
NYSE Composite 6,553.40, +74.12 (1.14%)
Advancing issues once again led decliners, 4471-1937, while new highs registered an edge over new lows, 142-49. Volume was once more on the pathetic side, though it's been that way all spring and summer. Most of the pundits and analysts following money at work or at rest have reported that there is still much on the sidelines, but there are signs that more is flowing into stocks on each successive dip.
The markets have largely gathered back everything lost on Friday and Monday. The Dow is just 48 points short of where it closed on Thursday, August 13. The NASDAQ is 20 points below the close from the same date and the S&P is just 5 points below the magic number at 1012.
NYSE Volume 1,119,247,000
Nasdaq Volume 1,988,868,000
Crude oil was up again, though only by 12 cents, to $72.54. Gold continued to trade in a range, losing $3.10 to $941.70. Silver also seems stuck, up a penny, to $13.88. Commodity prices, especially oil, are eventually going to lose investor interest and take on water as stocks have been consistently solid performers for the past 6 months running, since the bottom of March 9. While many portend that the trend cannot continue without a meaningful correction, the economic forces of globalization and deflation are playing important and, as yet misunderstood, roles in business cycles.
Pricing power being non-existent, the push of late has been for market share and product diversification. Companies which pared their labor and other costs early on have thrived under the new regimen and should continue to do so as the economies of the world gradually improve.
Thursday, August 20, 2009
Wednesday, August 19, 2009
Markets In Day-Long Rebound After Lower Open
The resiliency of this market cannot be overstated. The loser lines are crowded with traders - self included - who have called tops recently, and calls for a pullback can be heard from Wall Street to San Diego. The market, however, will have none of it. After falling on Friday and Monday, stocks have staged a remarkable turnaround, erasing most of the losses from the prior two sessions, when the Dow reached a 10-month high at 9398.
What had investors concerned at the open was a serious downdraft in the Shanghai (China) index, which has lost 20% of its value over recent days. The Dow was down 87 points in the opening minutes, but continued to climb from there, eventually turning positive just before noon and making the day's highs just after 1:00 pm. While the plight of Chinese stocks is usually not a market mover, that was the official line, until traders took a breath and reconsidered, especially in light of the fact that the Shanghai index was up more than 100% from recent lows prior to the pullback.
A little give-back was probably baked into the Chinese prices in the first place and profit-taking accounted for much of the selling.
Dow 9,279.16, +61.22 (0.66%)
NASDAQ 1,969.24, +13.32 (0.68%)
S&P 500 996.46, +6.79 (0.69%)
NYSE Composite 6,479.28, +42.21 (0.66%)
Today's internals were decidedly bullish, with advancing issues besting decliners, 3923-2456. New highs beat out new lows once again, notching a 77-51 advantage. Volume was actually a bit more agitated than the past few days.
NYSE Volume 1,026,465,000
NASDAQ Volume 1,995,397,000
Oil was a big winner, as energy stocks led the market after release of government data showed a shrinkage in supplies of some 8.40 million barrels in US stockpiles. Crude for September delivery rose a whopping $3.45, to $72.42, while the price of an ouce of gold gained $5.60, to $944.80. Silver continued to close lower, losing 9 cents to $13.88.
There will be some poorer people in the US after the IRS struck a deal with UBS to disclose the identities of more than 4400 people for whom the bank had managed private Swiss bank accounts.
Now, there's some news even the most stoic actuary can appreciate.
What had investors concerned at the open was a serious downdraft in the Shanghai (China) index, which has lost 20% of its value over recent days. The Dow was down 87 points in the opening minutes, but continued to climb from there, eventually turning positive just before noon and making the day's highs just after 1:00 pm. While the plight of Chinese stocks is usually not a market mover, that was the official line, until traders took a breath and reconsidered, especially in light of the fact that the Shanghai index was up more than 100% from recent lows prior to the pullback.
A little give-back was probably baked into the Chinese prices in the first place and profit-taking accounted for much of the selling.
Dow 9,279.16, +61.22 (0.66%)
NASDAQ 1,969.24, +13.32 (0.68%)
S&P 500 996.46, +6.79 (0.69%)
NYSE Composite 6,479.28, +42.21 (0.66%)
Today's internals were decidedly bullish, with advancing issues besting decliners, 3923-2456. New highs beat out new lows once again, notching a 77-51 advantage. Volume was actually a bit more agitated than the past few days.
NYSE Volume 1,026,465,000
NASDAQ Volume 1,995,397,000
Oil was a big winner, as energy stocks led the market after release of government data showed a shrinkage in supplies of some 8.40 million barrels in US stockpiles. Crude for September delivery rose a whopping $3.45, to $72.42, while the price of an ouce of gold gained $5.60, to $944.80. Silver continued to close lower, losing 9 cents to $13.88.
There will be some poorer people in the US after the IRS struck a deal with UBS to disclose the identities of more than 4400 people for whom the bank had managed private Swiss bank accounts.
Now, there's some news even the most stoic actuary can appreciate.
Tuesday, August 18, 2009
Monday's Fall Ushers in Tuesday's Rebound
My apologies for not posting the past couple of market days. I have been dealing with issues concerning my main site, dtmagazine.com. Mostly, these issues, from not having email or FTP access and various other problems were caused by the hosting company, x7hosting.com and their complete incompetence in migrating my site - and many others - from one set of servers to another. It is my intention to sue x7hosting.com for four days of lost revenue, aggravation and unnecessary interruption of my business. But that is another matter...
Over the past few days, US indices have taken a bit of a hit. Both Friday and Monday were down days, but Tuesday's mild recovery bodes well for the future of the stock markets. Tuesday's gain began to fill in the gap between Friday's close and Monday's open, and, if there's anything about markets for certain, it is that they always fill in gaps.
So, it is fairly safe to assume that the indices will bounce around current levels for at least the rest of this week. Another huge move to the downside seems unlikely, though a continuance of Tuesday's rally would be unsurprising.
Here are Tuesday's closing numbers:
Dow 9,217.94,+82.60 (0.90%)
NASDAQ 1,955.92, +25.08 (1.30%)
S&P 500 989.67, +9.94 (1.01%)
NYSE Composite 6,437.07, +84.96 (1.34%)
Advancing issues finished well ahead of decliners, 4879-1550. New highs outnumbered new lows, 78-48, a margin that has been narrowing recently, though it would not be a cause for alarm if the new lows took back the lead in coming days. The most significant issue facing the markets right now is how to read the abysmally low volume, though in light of the fact that volume has been off for most of the summer, it's best to attribute that to ongoing summer doldrums and some general investor trepidation about jumping back in at this time.
NYSE Volume 1,045,306,000
NASDAQ Volume 1,760,437,000
Commodities showed generalized strength on the day, with oil up $2.44, to $69.19; gold ahead by $3.40, to $939.20, though silver slipped 2 cents to $13.96 per ounce. Foodstuffs, grains and meats were mostly higher.
The biggest news of the day came prior to the opening bell, as July PPI was released, showing a massive 0.9% decline month-over-month, which has to come as a rejection for the inflationist camp and was met with so many "told you so's" by deflationists that the rancor was deafening.
Lower producer prices are usually the forecaster of tough times for retailers, who have thus far weathered the recession with particular aplomb and grace. Lower prices for all goods and services is in the cards for the next 6-18 months, regardless of the amount of money pumped into the nascent economy by the Fed and Treasury.
While the recession may be slowing, it is still far from over. Germany and Japan may have announced that they were recovering, but it's likely to be another 3-6 months before the US economy gets back on firm footing. Foreclosures are still running very high, as is unemployment. This recession - a surly and deep one that it is - wasn't created in a manner of a few months and it won't go away quickly either.
Look for more sideways trading in coming months and more than enough signs for both bulls and bears to be right occasionally. The US will bounce back, but it's going to take a while.
Over the past few days, US indices have taken a bit of a hit. Both Friday and Monday were down days, but Tuesday's mild recovery bodes well for the future of the stock markets. Tuesday's gain began to fill in the gap between Friday's close and Monday's open, and, if there's anything about markets for certain, it is that they always fill in gaps.
So, it is fairly safe to assume that the indices will bounce around current levels for at least the rest of this week. Another huge move to the downside seems unlikely, though a continuance of Tuesday's rally would be unsurprising.
Here are Tuesday's closing numbers:
Dow 9,217.94,+82.60 (0.90%)
NASDAQ 1,955.92, +25.08 (1.30%)
S&P 500 989.67, +9.94 (1.01%)
NYSE Composite 6,437.07, +84.96 (1.34%)
Advancing issues finished well ahead of decliners, 4879-1550. New highs outnumbered new lows, 78-48, a margin that has been narrowing recently, though it would not be a cause for alarm if the new lows took back the lead in coming days. The most significant issue facing the markets right now is how to read the abysmally low volume, though in light of the fact that volume has been off for most of the summer, it's best to attribute that to ongoing summer doldrums and some general investor trepidation about jumping back in at this time.
NYSE Volume 1,045,306,000
NASDAQ Volume 1,760,437,000
Commodities showed generalized strength on the day, with oil up $2.44, to $69.19; gold ahead by $3.40, to $939.20, though silver slipped 2 cents to $13.96 per ounce. Foodstuffs, grains and meats were mostly higher.
The biggest news of the day came prior to the opening bell, as July PPI was released, showing a massive 0.9% decline month-over-month, which has to come as a rejection for the inflationist camp and was met with so many "told you so's" by deflationists that the rancor was deafening.
Lower producer prices are usually the forecaster of tough times for retailers, who have thus far weathered the recession with particular aplomb and grace. Lower prices for all goods and services is in the cards for the next 6-18 months, regardless of the amount of money pumped into the nascent economy by the Fed and Treasury.
While the recession may be slowing, it is still far from over. Germany and Japan may have announced that they were recovering, but it's likely to be another 3-6 months before the US economy gets back on firm footing. Foreclosures are still running very high, as is unemployment. This recession - a surly and deep one that it is - wasn't created in a manner of a few months and it won't go away quickly either.
Look for more sideways trading in coming months and more than enough signs for both bulls and bears to be right occasionally. The US will bounce back, but it's going to take a while.
Thursday, August 13, 2009
Equities Maintain Positive Bias
For all the recent talk about the current rally being overextended, there doesn't seem to be much of a rush to sell stocks, which is probably why so many analysts are urging caution. Their hypothesis is that it would be better to take money off the table now, while stocks are still relatively overpriced, than later, when they will probably have fallen 5-10%.
However, with the panic of '08 a fast-fading memory, there is always the possibility that many investors, small and large alike, have taken positions in stocks when they were very cheap just a few months ago, and are probably not in any hurry to sell. After all, that's what the professionals tell us to do: buy, hold and prosper.
That strategy may be a sound one at this juncture. The heyday of day-trading is long past and your average 401k type is not going to be moving money around willy-nilly. Neither are heady fund managers, many of whom were burned badly in the last debacle. The slaughter that began in September 2008 (actually, the slide started in August of 2007) and ended abruptly on March 9, 2009, may have lodged itself firmly in the craniums of the top fund managers. And while they may be quicker on the trigger if things start slipping again, they're seasoned enough to recognize a fundamentally strong market when they see one. A 5-10% correction is not going to move them much, if at all.
The day began with some very ugly retail sales figures for the month of July, with an overall number of -0.1%, and -0.6% ex-autos. The "cash for clunkers" promotion by the government was such a hit that it had to be re-funded by congress, but while people were busy, out buying new cars, they apparently forgot to purchase clothes, batteries, food and other consumables. The numbers reflected the thinking of many who believe that the economy is still not on solid recovery ground, and they may be right, though there's enough activity to believe that the worst is behind us.
The retail sales figures knocked the starch out of stocks at the open, but they quickly rebounded and stayed mostly positive for the remainder of the session, adding another leg to yesterday's rally.
Dow 9,398.19, +36.58 (0.39%)
NASDAQ 2,009.35, +10.63 (0.53%)
S&P 500 1,012.73, +6.92 (0.69%)
NYSE Composite 6,604.10, +65.23 (1.00%)
Advancers were solidly ahead of declining issues, 3987-2444. New highs outpaced new lows, 157-54, and volume was moderate, though the NYSE was very quiet. The day's trading was not very volatile, but the positive tone bodes well for the future, though a slight correction, which everybody under the sun seems to be calling for, would not be a surprise. There still could be more upside before any major bout of profit-taking occurs, since the news flow has been generally good and earnings season is well past.
NYSE Volume 913,417,000
NASDAQ Volume 2,117,709,000
Commodities were mixed, though oil gained 36 cents, to finish the day at $70.52. Gold was up $4.00, to $956.50, while silver was the big winner, gaining 40 cents to $14.99.
Tomorrow morning's CPI report is not likely to cause any consternation in the markets because it will be a rather benign number.
However, with the panic of '08 a fast-fading memory, there is always the possibility that many investors, small and large alike, have taken positions in stocks when they were very cheap just a few months ago, and are probably not in any hurry to sell. After all, that's what the professionals tell us to do: buy, hold and prosper.
That strategy may be a sound one at this juncture. The heyday of day-trading is long past and your average 401k type is not going to be moving money around willy-nilly. Neither are heady fund managers, many of whom were burned badly in the last debacle. The slaughter that began in September 2008 (actually, the slide started in August of 2007) and ended abruptly on March 9, 2009, may have lodged itself firmly in the craniums of the top fund managers. And while they may be quicker on the trigger if things start slipping again, they're seasoned enough to recognize a fundamentally strong market when they see one. A 5-10% correction is not going to move them much, if at all.
The day began with some very ugly retail sales figures for the month of July, with an overall number of -0.1%, and -0.6% ex-autos. The "cash for clunkers" promotion by the government was such a hit that it had to be re-funded by congress, but while people were busy, out buying new cars, they apparently forgot to purchase clothes, batteries, food and other consumables. The numbers reflected the thinking of many who believe that the economy is still not on solid recovery ground, and they may be right, though there's enough activity to believe that the worst is behind us.
The retail sales figures knocked the starch out of stocks at the open, but they quickly rebounded and stayed mostly positive for the remainder of the session, adding another leg to yesterday's rally.
Dow 9,398.19, +36.58 (0.39%)
NASDAQ 2,009.35, +10.63 (0.53%)
S&P 500 1,012.73, +6.92 (0.69%)
NYSE Composite 6,604.10, +65.23 (1.00%)
Advancers were solidly ahead of declining issues, 3987-2444. New highs outpaced new lows, 157-54, and volume was moderate, though the NYSE was very quiet. The day's trading was not very volatile, but the positive tone bodes well for the future, though a slight correction, which everybody under the sun seems to be calling for, would not be a surprise. There still could be more upside before any major bout of profit-taking occurs, since the news flow has been generally good and earnings season is well past.
NYSE Volume 913,417,000
NASDAQ Volume 2,117,709,000
Commodities were mixed, though oil gained 36 cents, to finish the day at $70.52. Gold was up $4.00, to $956.50, while silver was the big winner, gaining 40 cents to $14.99.
Tomorrow morning's CPI report is not likely to cause any consternation in the markets because it will be a rather benign number.
Wednesday, August 12, 2009
Markets Regain Positive Tone on Fed Rate Decision
It may not have been just what the Federal Reserve's Open Market Committee did or said so much as a general mood that they wouldn't do anything to upset the rather delicate balancing act currently underway in world markets.
The Fed, as expected, kept the Federal Funds rate at 0 to .25%, and the discount rate at .50%, said more about improvements in markets than deterioration and slipped in a line or two suggesting that there was no more need for further quantitative easing - they've pledged to buy up to $300 billion in Treasury notes - after the end of October.
For a change, markets were markedly higher prior to the 2:15 pm announcement and changed little afterwards, with stocks more or less drifting at sustained levels into the close. This shows that Fed chairman Ben Bernanke understands the fragility of the situation and is very cautious about how Fed actions are explained to the markets and general public. Nearly a year after the worst financial shock since the Great Depression, Bernanke's Fed has provided leadership and persistence to bring the US and world economies back from the brink of disaster. Whether it's black magic or shrewd understanding of economics, he deserves credit for at least righting a ship that had gone seriously off course.
The next step is to bring back GDP growth, and jobs, no easy tasks, though today's response on the financial markets seem to indicate that the mood of investing professionals has definitely turned the most positive since September of 2008.
Dow 9,361.61, +120.16 (1.30%)
NASDAQ 1,998.72, +28.99 (1.47%)
S&P 500 1,005.81, +11.46 (1.15%)
NYSE Composite 6,538.87, +75.25 (1.16%)
Bolstering the optimistic tone was a return to advancing issues dominating decliners, 4690-1770, More new highs than new lows, 126-53, and a slight uptick in volume.
NYSE Volume 1,306,697,000
NASDAQ Volume 2,154,837,000
Commodities seemed to appreciate the mellow tone of the Fed announcement. Oil gained 71 cents, to $70.16; gold marked $4.90 higher, to $952.50, and silver gained 24 cents, to $14.59.
The Fed decision was crucial for the market to retain confidence. Next up is a broad survey of retail sales on Thursday, with preliminary CPI figures due out Friday, along with Capacity Utilization and Industrial Production reports for July.
The Fed, as expected, kept the Federal Funds rate at 0 to .25%, and the discount rate at .50%, said more about improvements in markets than deterioration and slipped in a line or two suggesting that there was no more need for further quantitative easing - they've pledged to buy up to $300 billion in Treasury notes - after the end of October.
For a change, markets were markedly higher prior to the 2:15 pm announcement and changed little afterwards, with stocks more or less drifting at sustained levels into the close. This shows that Fed chairman Ben Bernanke understands the fragility of the situation and is very cautious about how Fed actions are explained to the markets and general public. Nearly a year after the worst financial shock since the Great Depression, Bernanke's Fed has provided leadership and persistence to bring the US and world economies back from the brink of disaster. Whether it's black magic or shrewd understanding of economics, he deserves credit for at least righting a ship that had gone seriously off course.
The next step is to bring back GDP growth, and jobs, no easy tasks, though today's response on the financial markets seem to indicate that the mood of investing professionals has definitely turned the most positive since September of 2008.
Dow 9,361.61, +120.16 (1.30%)
NASDAQ 1,998.72, +28.99 (1.47%)
S&P 500 1,005.81, +11.46 (1.15%)
NYSE Composite 6,538.87, +75.25 (1.16%)
Bolstering the optimistic tone was a return to advancing issues dominating decliners, 4690-1770, More new highs than new lows, 126-53, and a slight uptick in volume.
NYSE Volume 1,306,697,000
NASDAQ Volume 2,154,837,000
Commodities seemed to appreciate the mellow tone of the Fed announcement. Oil gained 71 cents, to $70.16; gold marked $4.90 higher, to $952.50, and silver gained 24 cents, to $14.59.
The Fed decision was crucial for the market to retain confidence. Next up is a broad survey of retail sales on Thursday, with preliminary CPI figures due out Friday, along with Capacity Utilization and Industrial Production reports for July.
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