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First word: caution. This market is being set up for something big (and my guess is will be down). The economic data is softening far more than expected, and increasingly large repurchase amoutns are required ust to prevent declines (rather than initiate rallies). Breadth looks pretty crappy except on days when it's utterly manic.
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 2 repurchase operations.
- a $6billion, overnight repurchase entirely in T-backed collateral; and
- a $7billion, 14-day repurchase entirely in T-backed collateral.
Major US Indices
Pre-open, the data was so-so; jobless claims worse than expected (at 333k versus consensus of 320k); productivity growth (badly measured) was better than expected (2.6% compared with 2% consensus) but labour costs were also higher than expected (2.2% vs consensus of 2.0%). Bonds softened on the data, but equity futures rose to a new high for the week on the news (durng the thin Globex session).
The Dow Jones Industrial Average shed 44.26 points (0.43%), closing out the day at 10340.38 points. The index hit an intraday high of 10405.77 a half hour after the open, as a bunch of doofuses banked on a breakout above 10400. The swing high for the first half of the session was set right on 10 a.m., defying the odds in the face of a large quantity of repurchase dough.
Over the next hour and a half, the Dow went broadly sideways-to-down while the S&P pretty much just marked time. Then at 12:30 everything tanked hard (the Dow lost 90 points in under half an hour), and fell as low as 10296.48 points. A bounce at or near the round-number 10300 was to be expected that late in the session, and it arrrived right on cue. After a little retest of the low, it was mini-rally through to the close.
Within the blue-chip index, 11 stocks rose, the biggest gainers being Exxon Mobil (XOM, +1.00% to $57.80) and Intel (INTC, +0.62% to $24.26), which accounted for 5 Dow points between them. Losers in the Dow numbered 19 and were led by General Motors (GM, -5.91% to $30.86... dopey bastards who bought yesterday are udnerwater already...) and International Business Machines (IBM, -2.05% to $75.50), with these two stocks contributing -26 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 193.3m shares to 156.8m.
The broader S&P500 dipped 3.55 points (0.3%), to end the session at 1172.1. Within the index, gainers numbered 169, while 324 S&P500 stocks fell for the day. Volume was tilted 1.6:1 in favour of the losers with 1136.63 million units traded in the losers as compared with 707.12 million traded in the winners .
Over at Times Square, the Nasdaq Composite dipped 0.43 points (0.02%), to close at 1961.8, while larger-cap technology issues fared worse with the Nasdaq100 losing 2.04 points (0.14%), to end at 1450.16 points. Within the tech benchmark, gainers numbered 35, while 62 Nasdaq100 stocks fell for the day. Volume was tilted 1.1:1 in favour of the winners with 437.70 million traded in the losers compared to 415.31 million in the winners .
NYSE Volume was super-chunky, with 2.05 billion shares changing hands, while Nasdaq Volume was chunky, with 1.79 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 | 10340.38 | -44.26 | -0.43% |
| S&P500 | 1172.1 | -3.55 | -0.3% |
| Nasdaq Composite | 1961.8 | -0.43 | -0.02% |
| Nasdaq100 | 1450.16 | -2.04 | -0.14% |
| NYSE Volume | 2.05bn | - | - |
| Nasdaq Volume | 1.79bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 0.38%
- General Electric (GE) -$0.35 (0.97%) to $35.85;
- Citigroup (C) -$0.09 (0.19%) to $46.88;
- Wal Mart (WMT) +$0.12 (0.25%) to $48.57;
- I.B.M. (IBM) -$1.58 (2.05%) to $75.50;
- Intel (INTC) +$0.15 (0.62%) to $24.26;
- Cisco Systems (CSCO) +$0.35 (1.98%) to $18.00;
- eBay (EBAY) -$0.56 (1.62%) to $33.91;
- Fannie Mae (FNM) -$0.42 (0.75%) to $55.63; and
- Freddie Mac (FRE) -$0.42 (0.66%) to $63.15.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 1740 to 1537 for a single-day A/D reading of 203; Nasdaq gainers trumped losers by 1532 to 1492. The 10-day moving average of the A/D line fell to 380.1 on the NYSE, while the 10dma of the Nasdaq A/D rose to 32.2.
On the NYSE declining volume was greater than volume in advancing issues by 1103.2 to 875.3 million shares; Nasdaq advancing volume was greater than volume in decliners by 929 to 831.3 million shares.
82 NYSE-listed stocks rose to new 52-week highs, and 20 posted fresh 52-week lows, while on the Nasdaq there were 57 stocks that hit new 52-week highs, and 79 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1740 | 1532 |
| Decliners | 1537 | 1492 |
| Advancing Volume (m) | 875.25 | 928.98 |
| Declining Volume (m) | 1103.2 | 831.34 |
| New Highs | 82 | 57 |
| New Lows | 20 | 79 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 13.98 | 0.2 | 1.45% |
| CBOE Nasdaq Volatility Index | 18.12 | -0.2 | -1.09% |
| Equity Put-Call Ratio | 0.76 | 0 | 0% |
| 10-day PCR | 0.76 | 0 | 0.01% |
| SPX-VIX Ratio | 83.8 | -1.47 | -1.73% |
Bond Market Analysis
Bonds rose a tick at the long end, with the yield on the benchmark 30-year Treasury bond basically unchanged at 4.585%. The 30-year bond futures continues to taunt my short position - again it dipped down below 114 & 16/32 (it got as low as 114 & 9/32), but again it bounced back, closing out the session at 114 & 29/32. It's getting really annoying.
The middle of the yield curve was broadly higher: five year yields fell to 3.807%, and ten-year yields fell to 4.162%.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 0.0 bps wider at 11.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 68.0 bps for 10-year AAA, and 95.0 bps for 20-years.
Credit spreads (spreads between corporate bonds of the same maturity profile but different creditworthiness) were broadly wider with the AAA-A spread on 20-years 15.0 bps tighter at 26.0 basis points. That's too low, in my view.
The 10-year AAA-A spread getting stupider and stupider - last night, if the data is to be believed, it fell to -15bps. In other words bond buyers will discount the required rate of return on more risky bonds; there is a penaltyattached to AAA rating. That's mindless, senseless, and just plain dumb.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.747 | 0 | 0% |
| UST 2Y (yld) | 3.53 | -0.07 | -1.94% |
| UST 5Y (yld) | 3.807 | -0.055 | -1.42% |
| UST 10Y (yld) | 4.162 | -0.024 | -0.57% |
| UST 30Y (yld) | 4.585 | 0 | 0% |
The Banks Index slid 0.58 points (0.58%), ending the day at 98.68; within the index,
- Keycorp (KEY) -$0.48 (1.43%) to $33.20;
- Regions Financial (RF) -$0.46 (1.34%) to $33.94;
- Comerica (CMA) -$0.75 (1.28%) to $57.62;
- State Street (STT) -$0.56 (1.18%) to $46.93; and
- BB&T Corp (BBT) -$0.47 (1.15%) to $40.25.
The Broker-dealer Index slid 0.54 points (0.39%), at 138.84; the ticket clippers lined up as follows -
- Jeffries Group (JEF) -$0.68 (1.85%) to $36.06;
- A G Edwards (AGE) -$0.63 (1.56%) to $39.86;
- E*Trade (ET) -$0.16 (1.43%) to $11.00;
- Goldman Sachs (GS) -$0.97 (0.91%) to $105.30; and
- Merrill Lynch (MER) -$0.26 (0.48%) to $54.28.
The Philadelphia SOX (Semiconductor) index dipped 0.06 points (0.02%), ending the day at 394.32
- Novellus Systems (NVLS) -$0.29 (1.2%) to $23.90;
- Marvell Tech Group (MRVL) -$0.36 (1.06%) to $33.76;
- Teradyne (TER) -$0.11 (0.96%) to $11.30;
- Altera (ALTR) -$0.16 (0.77%) to $20.64; and
- National Semiconductors (NSM) -$0.15 (0.76%) to $19.64.
Gold & Silver Markets
Gold rose $0.70 (0.16%) to close at $430.70 per ounce. During the session the June contract dipped to $428.80 before an afternoon rally added over $2 an ounce to Gold's price.
Gold Bugs Index lost 0.72 points (0.39%), at 185.11
- Kinross Gold (KGC) -$0.13 (2.34%) to $5.43;
- Golden Star (GSS) -$0.06 (2.22%) to $2.64;
- Harmony Gold (HMY) -$0.09 (1.44%) to $6.17;
- Gold Fields (GFI) -$0.11 (1.11%) to $9.81; and
- Newmont Mining (NEM) -$0.39 (1%) to $38.47.
Silver rose $0.05 (0.71%) to close at $7.06 per ounce (basis the July contract). The Gold and Silver Index (XAU) lost 0.4 points (0.46%), to end the session at 85.88 points.
- Kinross Gold (KGC) -$0.13 (2.34%) to $5.43;
- Harmony Gold (HMY) -$0.09 (1.44%) to $6.17;
- Placer Dome (PDG) -$0.16 (1.15%) to $13.75; and
- Gold Fields (GFI) -$0.11 (1.11%) to $9.81.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 430.70 | 0.70 | 0.16% |
| Silver | 7.06 | 0.05 | 0.71% |
| PHLX Gold and Silver Index | 85.88 | -0.4 | -0.46% |
| AMEX Gold BUGS Index | 185.11 | -0.72 | -0.39% |
Oil Market
Oil was firmer after significant early-session weakness. It fell as low as $49.50 just before 1 p.m. NY time, but from there is rocketed over a dollar in the following hour and a half. Eventually it closed with a gain of $0.82 per barrel at $51.28 per barrel.
The Oil and Gas Index (XOI) rose 8.33 points (1.01%), closing at 830.09
- Sunoco (SUN) +$1.89 (1.92%) to $100.09;
- Occidental Petroleum (OXY) +$1.13 (1.64%) to $70.02; and
- TotalFinaElf S.A. (TOT) +$1.55 (1.38%) to $113.95.
The Oil service stocks (OSX) Index gained 0.89 points (0.68%), to end the session at 132.64
- Cooper Cameron (CAM) +$1.17 (2.07%) to $57.56;
- National Oilwells/Varco (NOV) +$0.81 (1.94%) to $42.60; and
- Noble Corp (NE) +$0.67 (1.27%) to $53.42.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 300.2 | -0.77 | -0.26% |
| Crude Oil Light Sweet | 51.28 | 0.82 | 1.63% |
| Heating Oil | 1.4537 | -0.01 | -0.43% |
| Natural Gas | 6.73 | 0.08 | 1.16% |
| Unleaded Gas | 1.492 | 0.01 | 0.91% |
| AMEX Oil Index | 830.09 | 8.33 | 1.01% |
| Oil Service Index | 132.64 | 0.89 | 0.68% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 84.07 | 0.08 | 0.1% |
| Euro | 1.2944 | -0.0001 | -0.01% |
| Yen | 104.61 | 0.14 | 0.13% |
| Sterling | 1.9005 | -0.0016 | -0.08% |
| Australian Dollar | 0.78 | -0.0005 | -0.06% |
| Swiss Franc | 1.1947 | 0.003 | 0.25% |
| Canadian Dollar | 0.8023 | -0.0001 | -0.01% |
