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Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation.
- a $5.75billion, weekend repurchase entirely in T-backed collateral.
The economic dataflow was pretty awful -
- only 110k new Non-farm Payrolls compared with expectations of 225k with wages growth slightly above consensus (0.3% versus consensus of 0.2%);
- Consumer Sentiment slightly worse than expected (92.6 vs expectations of 92.9); and
- the ISM Manufacturing Index barely beating expectations (55.2 vs consensus of 55.0).
Any what was the rationale for today's price action (keep in mind that bonds rose), provided by dills like Megan Davies from Reuters? Stocks fell - according to la Davies - as a result of renewed "inflation fears" because of the prices paid component of the ISM Survey.
All I can say is - I hope she's pretty.. coz that girl sure ain't none too bright.
How does the "inflation fears" rationale hold water - "inflation fears" - when bonds rallied, starting at the time the ISM was released? Of course, the rationale doesn't hold water. Where was the "inflation fear" in the market where inflation eats away at (non-indexed) coupon payments? (Hint for Mz Davies... that's the bond market, luvvie).
That's why young (I would guess) Megan is a journalist. She couldn't tell her ass from her elbow (and note from the use of "ass" that I am assuming she owns a donkey), but thinks that as long as a sentence sounds plausible, it's good to go. Yet another example of how the once-useful vocation of Journalism has been utterly Blair-ised.
Major US Indices
The Dow Jones Industrial Average shed 99.46 points (0.95%), closing out the day at 10404.3 points. The index hit an intraday high of 10568.93 just before 10 a.m. NY time, and fell as low as 10381.02 during the session (the low was hit with about 90 minutes until the closing bell).
I'm not hugely surprised at the willingness of da Boyz to keep pulling the market's chestnuts out of the fire - basically, trying to ensure that daily and weekly closes below 10400 are kept as few and far between as possible. The fact is, all the other indices have penetrated their year-to-date lows, but the market index that most couch-potatoes fixate on, is the Dow... and it is still almost a hundred points above its year-to-date low.
When that low is breached, there's a good prospect that something a tad more gut-wrenching is in the offing. We are close to the "exit timeframe" for most seasonal-thinkers - you will all recall the old maxim: "Get in on Columbus Day; Get Out in May and Stay Away". Look at the historical record and you will see that the average return on equities between May and October is negative in real terms. The average return between May and October when valuations are this stretched, is a big negative.
Within the blue-chip index, only 2 stocks rose, the gainers being Exxon Mobil (XOM, +1.59% to $60.55) and Boeing (BA, +0.55% to $58.78), which accounted for 9 Dow points between them. Losers in the Dow numbered 28 and were led by American International Group (AIG, -8.05% to $50.95) - I have said before I love to se Insurers cop a caning - and Wal Mart (WMT, -2.24% to $48.99), with these two stocks contributing -41 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 446.7m shares to 22.4m. Yowza - now that's a tilt!
The broader S&P500 shed 7.67 points (0.65%), closing at 1172.92. Within the index, gainers numbered 144, while 351 S&P500 stocks fell for the day. Volume was tilted 2.8:1 in favour of the losers -1.52 billion shares traded in the losers versus just 551 million in the winners.
Over at Times Square, the Nasdaq Composite slid 14.42 points (0.72%), to close at 1984.81, while larger-cap technology issues fared worse with the Nasdaq100 losing 13.18 points (0.89%), to end at 1469.35 points. Within the tech benchmark, there were just 19 stocks that posted a gain, while 80 Nasdaq100 stocks fell. Volume was tilted 2.7:1 to the losers - 597 million shares traded in the losers compared with 223.4 million in the winners.
NYSE Volume was super-chunky, with 2.17 billion shares changing hands, and Nasdaq Volume was likewise chunky, with 1.89 billion shares flitting around in cyberspace.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10404.3 | -99.46 | -0.95% |
| S&P500 | 1172.92 | -7.67 | -0.65% |
| Nasdaq Composite | 1984.81 | -14.42 | -0.72% |
| Nasdaq100 | 1469.35 | -13.18 | -0.89% |
| NYSE Volume | 2.17bn | - | - |
| Nasdaq Volume | 1.89bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 1.56%, with a lot of the damage coming from economically sensitive stocks (GE, WMT) and the usual negative contribution being made by those two toxic waste-lands, Fannie and Freddie.
I mentioned that recent repo numbers - with their strange tilt towards agency- and mortgage-backed collateral - have pointed to some underlying dislocation in the mortgage markets; you would think that on such a bond-friendly day, the stocks of the two big mortgage-backers would fare better than the market.
- General Electric (GE) -$0.59 (1.64%) to $35.47;
- Citigroup (C) -$0.32 (0.71%) to $44.62;
- Wal Mart (WMT) -$1.12 (2.24%) to $48.99;
- I.B.M. (IBM) -$0.94 (1.03%) to $90.44;
- Intel (INTC) -$0.22 (0.95%) to $23.01;
- Cisco Systems (CSCO) -$0.19 (1.06%) to $17.70;
- eBay (EBAY) -$0.19 (0.51%) to $37.07;
- Fannie Mae (FNM) -$1.21 (2.22%) to $53.24; and
- Freddie Mac (FRE) -$2.35 (3.72%) to $60.85.
Market Breadth & Internals
NYSE declining Issues beat out advancers by 1666 to 1613, for a single-day A/D reading of -53; that's amazingly "balanced" considering the pasting that is showing in the headline index movements. Nasdaq losers exceeded gainers by 1970 to 1100. The 10-day moving average of the A/D line fell to 346.9 on the NYSE, while the 10dma of the Nasdaq A/D fell to -232.6.
On the NYSE declining volume was greater than volume in advancing issues by 1432.4 to 715.4 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 1302.4 to 542.3 million shares.
58 NYSE-listed stocks rose to new 52-week highs, and 56 posted fresh 52-week lows, while on the Nasdaq there were 54 stocks that hit new 52-week highs, and 118 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1613 | 1100 |
| Decliners | 1666 | 1970 |
| Advancing Volume (m) | 715.38 | 542.26 |
| Declining Volume (m) | 1432.4 | 1302.44 |
| New Highs | 58 | 54 |
| New Lows | 56 | 118 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 14.09 | -0.06 | -0.42% |
| CBOE Nasdaq Volatility Index | 17.61 | -0.07 | -0.4% |
| Equity Put-Call Ratio | 0.84 | 0.19 | 29.23% |
| 10-day PCR | 0.71 | 0.03 | 4.97% |
| SPX-VIX Ratio | 83.2 | 0.35 | 0.43% |
Bond Market Analysis
Bonds rose along the curve, with the majority of the gains in the "belly" (2-to-5 year maturities). The yield on the benchmark 30-year Treasury bond shedding 3.7 basis points to 4.729%, while the 2-year yield dropped 6 basis points to 3.71%. It looks like the bond market is starting to "price out" any requirement for aggressive tightening by the Fed.
Bonds were all over the place after the Payrolls data - they spiked hard immediately after the numbers, with the 30-year futures climbing to 112&16/32. Then they fell over a point and a half in the course of two hours. Yet again - the "fade" of the post-announcement move was the sensible thing to do (it usually is).
Then something interesting happened: the ISM non-manufacturing survey was released at just before the ISM manufacturing survey was due (the non-Manufacturing survey was actually due out next Tuesday, but was released "inadvertently"). It wasn't flash - but I wouldn't have thought it "bond-bullish". Nevertheless, after dropping to 110&25/32 seconds before the report, the long bond started moving upwards, and pretty much did so for the remainder of the session - it rose a full point off its lows! Talk about a roller-coaster!
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.727 | 0 | 0% |
| UST 2Y (yld) | 3.71 | -0.06 | -1.59% |
| UST 5Y (yld) | 4.125 | -0.049 | -1.17% |
| UST 10Y (yld) | 4.451 | -0.045 | -1% |
| UST 30Y (yld) | 4.729 | -0.037 | -0.78% |
The Banks Index slid 0.71 points (0.74%), closing at 95.84; within the index,
- Suntrust Banks (STI) -$1.17 (1.62%) to $70.90;
- MBNA Corp (KRB) -$0.35 (1.43%) to $24.20;
- Keycorp (KEY) -$0.44 (1.36%) to $32.01;
- M&T Bank Corp (MTB) -$1.17 (1.15%) to $100.89; and
- Wachovia (WB) -$0.57 (1.12%) to $50.34.
The Broker-dealer Index declined 1.52 points (1.04%), to 144.12; the ticket clippers lined up as follows -
- Legg Mason (LM) -$1.94 (2.48%) to $76.20;
- A G Edwards (AGE) -$1.05 (2.34%) to $43.75;
- E*Trade (ET) -$0.20 (1.67%) to $11.80;
- Bear Stearns (BSC) -$1.63 (1.63%) to $98.27; and
- Lehman Brothers (LEH) -$1.38 (1.47%) to $92.78.
The Philadelphia SOX (Semiconductor) index slid 5.77 points (1.38%), to end the session at 411.22
- National Semiconductors (NSM) -$0.50 (2.43%) to $20.11;
- Altera (ALTR) -$0.43 (2.17%) to $19.35;
- Teradyne (TER) -$0.31 (2.12%) to $14.29;
- Texas Instruments (TXN) -$0.53 (2.08%) to $24.96; and
- Maxim Integrated (MXIM) -$0.73 (1.79%) to $40.14.
Gold & Silver Markets
Gold fell by $2.4 (0.56%) to close at $425.90 per ounce. Stronger USD (mystifyingly so... it's purely technical/nuffie-slaying) = Weaker Gold, at least for the time being..
Gold Bugs Index defied the movement in its primary driver, and posted a rise of 1.25 points (0.62%), to end the session at 203.11
- Randgold Resources (GOLD) +$0.44 (3.56%) to $12.80;
- Eldorado Gold (EGO) +$0.08 (2.79%) to $2.95;
- Kinross Gold (KGC) +$0.12 (2%) to $6.12;
- Golden Star (GSS) +$0.05 (1.74%) to $2.92; and
- Freeport McMoran (FCX) +$0.40 (1.01%) to $40.01.
Silver fell by $0.18 (2.51%) to close at $6.99 per ounce. The Gold and Silver Index (XAU) gained 0.28 points (0.3%), closing at 94.01 points.
- Kinross Gold (KGC) +$0.12 (2%) to $6.12;
- Anglogold Ashanti (AU) +$0.45 (1.31%) to $34.90;
- Freeport McMoran (FCX) +$0.40 (1.01%) to $40.01; and
- Harmony Gold (HMY) +$0.07 (0.9%) to $7.87.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 425.90 | -2.40 | -0.56% |
| Silver | 6.99 | -0.18 | -2.51% |
| PHLX Gold and Silver Index | 94.01 | 0 | 0% |
| AMEX Gold BUGS Index | 203.11 | 0 | 0% |
Oil Market
Oil was firmer, rising by a whopping $2.02 (3.66%) per barrel, closing at $57.27 per barrel. At its high for the day it came within 50c a barrel of its recent swing high (which was $58.16 for the May contract, set on March 17th). It also ended the session close to (but not above) its closing high of $57.46 set on March 21st.
The rest of the energy complex - Heating Oil, Natural Gas, and Unleaded Gas - have all broken to new highs.
The mitigating factor for further increases, is that all of these markets are starting to look very overbought on medium-term charts; you see, at the moment it's too easy to make money by buying pullbacks... which probably means that the next pullback will be a doozy. I'll be keeping an eye on this one, because there's a good chance that next week will present a good shorting opportunity - a couple of grand per contract on a single intraday trade... but we'll see.
The Oil and Gas Index (XOI) rose 17.71 points (2.08%), to end the session at 870.23
- Unocal (UCL) +$2.66 (4.31%) to $64.35;
- Sunoco (SUN) +$4.03 (3.89%) to $107.55; and
- Occidental Petroleum (OXY) +$2.47 (3.47%) to $73.64.
The Oil service stocks (OSX) Index gained 2.97 points (2.13%), closing at 142.28
- Noble Corp (NE) +$2.09 (3.72%) to $58.30;
- Transocean (RIG) +$1.77 (3.44%) to $53.23; and
- Halliburton (HAL) +$1.40 (3.24%) to $44.65.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 311.88 | -1.69 | -0.54% |
| Crude Oil Light Sweet | 57.27 | 2.02 | 3.66% |
| Heating Oil | 1.6638 | 0.01 | 0.37% |
| Natural Gas | 7.749 | 0.12 | 1.55% |
| Unleaded Gas | 1.731 | 0.08 | 4.6% |
| AMEX Oil Index | 870.23 | 0 | 0% |
| Oil Service Index | 142.28 | 0 | 0% |
Currency Markets
Funny how the dominant mid-term trend identifies itself when there's a fan-splat. The data was pretty uniform in its weakness, and yet the USD rallied some more. It dipped - hard- immediately following the data... yet again, in order to trigger a bunch of nuffie-stops (this happened in every single "US-centric" market once the data came out; bonds, equity futures, currencies - the lot). It then rallied a full point (a little more, in fact), rising from 83.60 to a tad over 84.60 before a settling at its closing level.
Amazing - everyone will be scratching their heads, asking "if the US economy is falling in a hole, and bonds are rallying, why would the USDX be strengthening?" Simple, dummy... it was due for a bounce. It was actually overdue for a good nuffie-slaughter. It doesn't change the end-game one little bit - it just gives professionals some more opportunities to feast on nuffie-accounts along the way.
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 84.43 | 0.39 | 0.46% |
| Euro | 1.2903 | -0.0003 | -0.02% |
| Yen | 107.56 | -0.04 | -0.04% |
| Sterling | 1.8803 | -0.0005 | -0.03% |
| Australian Dollar | 0.7711 | 0.0001 | 0.01% |
| Swiss Franc | 1.2032 | 0.0004 | 0.03% |
| Canadian Dollar | 0.8227 | -0.0005 | -0.06% |
