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Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 2 repurchase operations.
- a $6.5billion, 8-day repurchase with $6.394billion in T-backed collateral ; and
- a $9billion, 14-day repurchase with $6.62billion in T-backed collateral .
Now that's a lot of repo - and yet the market yielded bubkus for anyone who had a punt on the long side at 10 a.m. (mostly because the second $6bill repo wasn't announced until 9:45 - an hour later than usual). We will have to start allowing for the time at which the repurchases are undertaken...
Major US Indices
All of the indices closed right at their lows of the session, after a promising start. At 12:30 p.m. the Dow was up about 60 and everything looked just hunky-dory... and everything turned to a pile of crap from that moment on.
The market appeared to have been hanging its hat on GE's profit upgrade, because the other data was - on balance - awful.
- Jobless claims numbers(released before the market opened) were worse than anticipated (324k compared with a consensus range of 312-319k);
- Durable Goods orders stank (especially the most important number - non-defence capex ex-aircraft - which fell 2.1%); and, (surprise surprise)
- New Home Sales continued to crank. The rate of purchase of new homes rose a staggering 9.1%; does this remind you of the Nasdaq in 1999/2000? It seems that everyone still believes that real estate never goes down... what happens when everyone already has more house than they need, and rates continue to rise even as demographics mean progressively smaller cohorts of buyers? This is a generational high in the housing market.
The Dow Jones Industrial Average shed 13.15 points (0.13%), closing out the day at 10442.87 points. The index hit an intraday high of 10518.63, and fell as low as 10442.87 (at the close).
Within the blue-chip index, 13 stocks rose, the biggest gainers being General Motors (GM, +2.23% to $29.30) on its profit update and Home Depot (HD, +0.88% to $38.03), which accounted for 7 Dow points between them. Losers in the Dow numbered 16 and were led by American International Group (AIG, -1.92% to $55.61) and Exxon Mobil (XOM, -1.81% to $59.00), with these two stocks contributing -16 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 190.7m shares to 139.4m.
The broader S&P500 shed 1.11 points (0.09%), at 1171.42. Over at Times Square, the Nasdaq Composite added 0.84 points (0.04%), to close at 1991.06, while larger-cap technology issues fared worse with the Nasdaq100 losing 1.83 points (0.12%), to end at 1469.94 points.
NYSE Volume was chunky, with 1.72 billion shares changing hands, while Nasdaq Volume was chunky, with 1.66 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10442.87 | -13.15 | -0.13% |
| S&P500 | 1171.42 | -1.11 | -0.09% |
| Nasdaq Composite | 1991.06 | 0.84 | 0.04% |
| Nasdaq100 | 1469.94 | -1.83 | -0.12% |
| NYSE Volume | 1.72bn | - | - |
| Nasdaq Volume | 1.66bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 0.17%
- General Electric (GE) +$0.23 (0.65%) to $35.73;
- Citigroup (C) +$0.07 (0.16%) to $44.52;
- Wal Mart (WMT) +$0.01 (0.02%) to $50.66;
- I.B.M. (IBM) +$0.18 (0.2%) to $90.70;
- Intel (INTC) -$0.21 (0.9%) to $23.18;
- Cisco Systems (CSCO) +$0.13 (0.73%) to $17.88;
- eBay (EBAY) -$0.42 (1.17%) to $35.50;
- Fannie Mae (FNM) +$0.05 (0.09%) to $54.21; and
- Freddie Mac (FRE) -$0.84 (1.32%) to $62.84.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 1975 to 1331 for a single-day A/D reading of 644. Nasdaq gainers trumped losers by 1633 to 1413. The 10-day moving average of the A/D line rose to -659.7 on the NYSE, while the 10dma of the Nasdaq A/D rose to -389.9.
NYSE advancing volume exceeded volume in decliners by 964 to 711 million shares; Nasdaq advancing volume was greater than volume in decliners by 919 to 708.7 million shares.
32 NYSE-listed stocks rose to new 52-week highs, and 57 posted fresh 52-week lows, while on the Nasdaq there were 41 stocks that hit new 52-week highs, and 79 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1975 | 1633 |
| Decliners | 1331 | 1413 |
| Advancing Volume (m) | 964.02 | 919.02 |
| Declining Volume (m) | 710.97 | 708.73 |
| New Highs | 32 | 41 |
| New Lows | 57 | 79 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 13.45 | -0.61 | -4.34% |
| CBOE Nasdaq Volatility Index | 17.15 | -0.53 | -3% |
| Equity Put-Call Ratio | 0.62 | -0.14 | -18.42% |
| 10-day PCR | 0.75 | -0.03 | -4.26% |
| SPX-VIX Ratio | 87.1 | 3.7 | 4.44% |
Bond Market Analysis
Bonds rose at the long end, with the yield on the benchmark 30-year Treasury bond shedding 1.9 basis points to 4.844%. The "second resistance" I had identified in the 5-year yield (at 4.3% after 4.25% was broken) was actually broken on Tuesday, and I forgot to mention it.
The fact that it broke during a period of extreme oversoldness (is that a word? it is now) in the bond market, is the primary reason for the slight retracement in yields. It's next stop 5% for the 30-year yield, and 4.5% on the 5-year. The steepening of the yield curve has already added 40 basis points to mortgage rates in the last three weeks, and despite that the housing market keeps chugging upwards... someone will be the last fool, I guess. I notice though, that the refinancing portion of the mortgage index fell sharply - and it is cash-out refi that is aiding the debt-addled consumer budget.
I mentioned yesterday that I would provide an update on what would have happened to the option strangle in the 10-year bond (which should have been closed entirely when one leg quintupled). Anyone who took one half position off at 100% profit and held on to the other half until expiration (the usual mechanism for longer-dated option calls), ended up with nothing; the second half went to zero.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.77 | 0 | 0% |
| UST 2Y (yld) | 3.84 | 0.03 | 0.79% |
| UST 5Y (yld) | 4.289 | -0.005 | -0.12% |
| UST 10Y (yld) | 4.591 | -0.016 | -0.35% |
| UST 30Y (yld) | 4.844 | -0.019 | -0.39% |
The Banks Index dipped 0.35 points (0.37%), ending the day at 95.3; within the index,
- Washington Mutual (WM) -$0.58 (1.46%) to $39.11;
- Northern Trust (NTRS) -$0.51 (1.21%) to $41.60;
- PNC Financial Services (PNC) -$0.59 (1.16%) to $50.40;
- Mellon Financial (MEL) -$0.32 (1.12%) to $28.22; and
- Zions Bancorp (ZION) -$0.72 (1.05%) to $67.88.
The Broker-dealer Index dipped 0.41 points (0.28%), to 144.3; the ticket clippers lined up as follows -
- Ameritrade (AMTD) -$0.20 (1.93%) to $10.17;
- Charles Schwab (SCH) -$0.12 (1.18%) to $10.01;
- Bear Stearns (BSC) -$0.87 (0.88%) to $98.38;
- Legg Mason (LM) -$0.33 (0.41%) to $79.30; and
- E*Trade (ET) -$0.03 (0.25%) to $11.98.
The Philadelphia SOX (Semiconductor) index posted a rise of 1.02 points (0.25%), to 415.88
- Altera (ALTR) +$0.01 (0.05%) to $19.30;
- Advanced Micro Devices (AMD) +$0.47 (3%) to $16.12;
- Applied Materials (AMAT) +$0.42 (2.59%) to $16.63;
- Teradyne (TER) +$0.23 (1.6%) to $14.65; and
- KLA-Tencor (KLAC) +$0.54 (1.19%) to $45.89.
Gold & Silver Markets
Gold fell by $0.50 (0.12%) to close at $424.50 per ounce. The USD price of Gold is now pretty much hostage to the path of the USD itself, and since the USD is bouncing, Gold is having a tough time getting any upwards traction. It's not rocket science.
Gold Bugs Index slid 2.59 points (1.28%), to end the session at 199.34
- Harmony Gold (HMY) -$0.66 (7.76%) to $7.85;
- Gold Fields (GFI) -$0.37 (3.04%) to $11.80;
- Coeur d'Alene (CDE) -$0.10 (2.73%) to $3.56;
- Hecla Mining (HL) -$0.08 (1.46%) to $5.39; and
- Golden Star (GSS) -$0.03 (1.12%) to $2.66.
Silver fell by $0.05 (0.67%) to close at $6.93 per ounce. The Gold and Silver Index (XAU) lost 0.95 points (1.01%), to end the session at 92.97 points.
- Harmony Gold (HMY) -$0.66 (7.76%) to $7.85;
- Durban Rooderpoert Deep (DROOY) -$0.05 (4.81%) to $0.99;
- Gold Fields (GFI) -$0.37 (3.04%) to $11.80; and
- Anglogold Ashanti (AU) -$0.56 (1.58%) to $34.93.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 424.50 | -0.50 | -0.12% |
| Silver | 6.93 | -0.05 | -0.67% |
| PHLX Gold and Silver Index | 92.97 | -0.95 | -1.01% |
| AMEX Gold BUGS Index | 199.34 | -2.59 | -1.28% |
Oil Market
Oil was firmer, rising by $0.77 per barrel, closing at $54.84 per barrel. The explosion at the 3rd largest oil refinery in the country didn't help: the refinery in question produces just over 3% of all US gasoline, but the area of the plant that was put out of commission was actually already shut down for maintenance. Still, the rest of the plant was forced to close for about 10 hours, although plant management told CNN that overall production would not be affected.
The Oil and Gas Index (XOI) lost 1.07 points (0.13%), to end the session at 839.79
- Exxon Mobil (XOM) -$1.09 (1.81%) to $59.00;
- Royal Dutch Shell (RD) -$0.34 (0.57%) to $59.68; and
- BP (BP) -$0.30 (0.48%) to $61.71.
The Oil service stocks (OSX) Index posted a rise of 0.79 points (0.59%), to 135.4
- Cooper Cameron (CAM) +$1.02 (1.89%) to $55.02;
- Nabors Industries (NBR) +$1.05 (1.85%) to $57.87; and
- BJ Services (BJS) +$0.56 (1.13%) to $49.91.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 306.88 | 0.37 | 0.12% |
| Crude Oil Light Sweet | 54.84 | 0.77 | 1.42% |
| Heating Oil | 1.5484 | 0 | 0.19% |
| Natural Gas | 1.062 | -6.11 | -85.18% |
| Unleaded Gas | 1.5992 | 0 | 0.08% |
| AMEX Oil Index | 839.79 | -1.07 | -0.13% |
| Oil Service Index | 135.4 | 0.79 | 0.59% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 84.18 | 0.24 | 0.29% |
| Euro | 1.2939 | -0.005 | -0.38% |
| Yen | 106.33 | 0.39 | 0.37% |
| Sterling | 1.8692 | -0.0009 | -0.05% |
| Australian Dollar | 0.7715 | -0.0011 | -0.14% |
| Swiss Franc | 1.2011 | 0.0056 | 0.47% |
| Canadian Dollar | 0.8223 | 0.0003 | 0.04% |
