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There didn't seem to be much to get exccited about, but you know how Americans are... they're like teenage females: give them a reason to scream and giggle, and off they go. The news that George Bush had planned to bomb al-Jazeera's offices in (friendly) Qatar didn't even cause a ripple - but I guess that's to be expected: during the 1940s the stock prices of companies like IG Farben didn't ripple when news of German war crimes started to percolate through the media.
Apart from boring old War Crimes, there was some economic data:
- MBA Purchase Applications dipped 1.2% (and the refinancing component dropped another 6.9%);
- New Jobless Claims rose to 335k (consensus was for a rise to 315k);
- Consumer Sentiment rose to 81.6 (consensus was for 80.9);
- Crude Oil Inventories (as well as distillate and Gas inventories) rose for the week.
So let's get this straight: the only real 'bright spots' in the data concerned energy prices (but the energy market didn't react at all) and Consumer Sentiment (which is entirely a backward-looking indicator - overlay the Consumer Sentiment data on a chart of the S&P500 and you will see that the stock market is the prime driver of the data series... in other words people's expectations are entirely sideways-to-backwards-looking).
But let's think again about the plan that George Bush was hatching to bomb al-Jazeerah's offices. If he had gone ahead, who do you think would have been declared responsible? Do you thik that the Yanks would have tried to claim it was an accident - like all the other journalists they've killed in Iraq? Or do you think it would have been 'spun' as another piece of handiwork by that evil genius Abu Musab al-Zarqawi?
He's the new Immanuel Goldstein nowadays, in case you haven't been keeping up... first it was Bush's Daddy's golf-and-business-partner's son Usama, then it was CIA asset Ayman al-Zawahiri, now it's a bloke with a wooden leg who moves like a jungle cat. If all amputees had the level of co-ordination and agility that Zarqawi showed in "his" beheading videos, there would be no need for a 'Special Olympics' for cripples. And he really needs to get out in the sun - for a Jordanian he sure had lily-white arms.
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 2 repurchase operations:
- a $12billion, 15-day repurchase entirely in T-backed collateral undertaken at a 2 basis point discount to the Fed Funds Rate (FFR); and
- a $10.5billion, 2-day repurchase with $7.606billion in T-backed collateral undertaken at a 4 basis point discount to the Fed Funds Rate (FFR).
Major US Indices
The Dow Jones Industrial Average posted a rise of 44.66 points (0.41%), closing out the day at 10916.09 points. The index hit an intraday high of 10950.75 (10950-ish) at 2:20 p.m. NY time, after dipping to 10855.34 (10850-ish) in the first five minutes of trade. A 95-point move in the Dow - albeit over a 5-hour period - might be thought to require a catalyst, but there was bupkes: the economic data was not flash, Oil has 'dug in' at prices in the high 50's despite an EIA Petroleum Status Report that should have been bearish for oil prices... it seems that everyone is concentrating on this idea that the Fed might be nearing the end of its hiking phase. That alone is not sufficient for stocks to go on a tear.
Within the blue-chip index, 23 stocks rose, the biggest gainers being Mcdonalds (MCD, +2.18% to $33.71) and Intel (INTC, +1.83% to $26.64), which accounted for 10 Dow points between them. Losers in the Dow numbered 7 and were led by Caterpillar (CAT, -1.28% to $58.01) and Du Pont (DD, -0.76% to $42.82), with these two stocks contributing -9 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 320.5m shares to 52m.
The broader S&P500 posted a rise of 4.38 points (0.35%), closing at 1265.61. Within the index, gainers numbered 318, while 163 S&P500 stocks fell for the day. Volume was tilted 2.8:1 in favour of the winners with 1290.27 million units traded in the winners as compared with 455.92 million traded in the losers .
Over at Times Square, the Nasdaq Composite advanced 6.42 points (0.28%), to close at 2259.98, while larger-cap technology issues fared worse with the Nasdaq100 adding 2.63 points (0.16%), to end at 1696.77 points. Within the tech benchmark, gainers numbered 54, while 42 Nasdaq100 stocks fell for the day. Volume was tilted 3.9:1 in favour of the winners with 592.82 million traded in the winners compared to 151.06 million in the losers .
NYSE Volume was very chunky, with 1.96 billion shares changing hands, while Nasdaq Volume was about average, with 1.59 billion shares traded.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10916.09 | 44.66 | 0.41% |
| S&P500 | 1265.61 | 4.38 | 0.35% |
| Nasdaq Composite | 2259.98 | 6.42 | 0.28% |
| Nasdaq100 | 1696.77 | 2.63 | 0.16% |
| NYSE Volume | 1.96bn | - | - |
| Nasdaq Volume | 1.59bn | - | - |
Bellwethers
My 9-stock "bellwethers" group rose by an average of 0.71%
- General Electric (GE) -$0.12 (0.33%) to $35.94;
- Citigroup (C) +$0.42 (0.86%) to $49.34;
- Wal Mart (WMT) +$0.37 (0.74%) to $50.57;
- I.B.M. (IBM) +$0.81 (0.92%) to $88.80;
- Intel (INTC) +$0.48 (1.83%) to $26.64;
- Cisco Systems (CSCO) +$0.16 (0.93%) to $17.44;
- eBay (EBAY) -$0.11 (0.24%) to $46.64;
- Fannie Mae (FNM) +$0.57 (1.14%) to $50.37; and
- Freddie Mac (FRE) +$0.32 (0.5%) to $64.40.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 1957 to 1311 for a single-day A/D reading of 646; Nasdaq gainers trumped losers by 1601 to 1417. The 10-day moving average of the A/D line rose to 374.8 on the NYSE, while the 10dma of the Nasdaq A/D fell to 195.1.
NYSE advancing volume exceeded volume in decliners by 1232.7 to 679.6 million shares; Nasdaq advancing volume was greater than volume in decliners by 1085.8 to 467.6 million shares.
237 NYSE-listed stocks rose to new 52-week highs, and 101 posted fresh 52-week lows, while on the Nasdaq there were 165 stocks that hit new 52-week highs, and 34 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1957 | 1601 |
| Decliners | 1311 | 1417 |
| Advancing Volume (m) | 1232.68 | 1085.82 |
| Declining Volume (m) | 679.59 | 467.56 |
| New Highs | 237 | 165 |
| New Lows | 101 | 34 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 11 | 0.37 | 3.48% |
| CBOE Nasdaq Volatility Index | 13.94 | -0.05 | -0.36% |
| Equity Put-Call Ratio | 0.59 | -0.18 | -23.38% |
| 10-day PCR | 0.61 | 0 | 0% |
| SPX-VIX Ratio | 115.1 | -3.59 | -3.03% |
Bond Market Analysis
Bonds fell at the long end, with the yield on the benchmark 30-year Treasury bond rising 5.2 bps to 4.707%.
The middle of the yield curve was broadly lower: five year yields rose to 4.376%, and ten-year yields rose to 4.474%. When you consider that the latest tranche of 2-year notes were cleared today at a yield of 4.349% (i.e., less than 3 basis points below 5-year yields) you have to ask yourself what the bond market thinks about the future: the almost complete absence of any time premium for the additional 3-year holding period. A yield curve flattening during a period of supposed economic expansion? Show me where that has happened.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 10.0 bps wider at 20.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 75.0 bps for 10-year AAA, and 95.5 bps for 20-years.
Credit spreads (spreads between corporate bonds of the same maturity profile but different creditworthiness) were broadly narrower with the AAA-A spread on 20-years tightening 13.0 bps to 25.0 basis points and the 10-year AAA-A spread 12.0 bps tighter at -8.0 bps.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 3.852 | 0.02 | 0.52% |
| UST 2Y (yld) | 4.32 | 0.03 | 0.7% |
| UST 5Y (yld) | 4.376 | 0.042 | 0.97% |
| UST 10Y (yld) | 4.474 | 0.046 | 1.04% |
| UST 30Y (yld) | 4.707 | 0.052 | 1.12% |
The Banks Index rose 0.7 points (0.67%), to 105.58; within the index,
- Wachovia (WB) +$1.09 (2.02%) to $55.13;
- National City Corp (NCC) +$0.64 (1.89%) to $34.49;
- JPMorganChase (JPM) +$0.58 (1.52%) to $38.78;
- Bank Of America (BAC) +$0.61 (1.32%) to $46.71; and
- MBNA Corp (KRB) +$0.35 (1.31%) to $27.10.
The Broker-dealer Index gained 2.01 points (1.02%), at 198.39; the ticket clippers lined up as follows -
- Legg Mason (LM) +$2.47 (2.02%) to $124.77;
- Charles Schwab (SCH) +$0.26 (1.72%) to $15.36;
- Lehman Brothers (LEH) +$2.17 (1.67%) to $132.17;
- Ameritrade (AMTD) +$0.38 (1.61%) to $23.95; and
- Morgan Stanley (MWD) +$0.90 (1.59%) to $57.35.
The Philadelphia SOX (Semiconductor) index declined 2.39 points (0.49%), to end the session at 480.48
- Advanced Micro Devices (AMD) -$0.87 (3.21%) to $26.22;
- Marvell Tech Group (MRVL) -$0.95 (1.68%) to $55.74;
- Micron Technology (MU) -$0.18 (1.23%) to $14.49;
- KLA-Tencor (KLAC) -$0.62 (1.19%) to $51.70; and
- Texas Instruments (TXN) -$0.35 (1.08%) to $32.20.
Gold & Silver Markets
Gold fell by $0.60 (0.12%) to close at $492.30 per ounce.
The Gold Bugs Index dipped 6.11 points (2.4%), to end the session at 248.7
- Gold Fields (GFI) -$0.85 (5.26%) to $15.31;
- Harmony Gold (HMY) -$0.54 (4.09%) to $12.67;
- Golden Star (GSS) -$0.07 (2.86%) to $2.38;
- Eldorado Gold (EGO) -$0.11 (2.67%) to $4.01; and
- Hecla Mining (HL) -$0.08 (2.06%) to $3.80.
Silver fell by $0.04 (0.49%) to close at $8.13 per ounce.
The Gold and Silver Index (XAU) lost 2.8 points (2.35%), to 116.26 points.
- Gold Fields (GFI) -$0.85 (5.26%) to $15.31;
- Harmony Gold (HMY) -$0.54 (4.09%) to $12.67;
- Anglogold Ashanti (AU) -$1.46 (3.28%) to $43.00; and
- Barrick Gold (ABX) -$0.67 (2.41%) to $27.14.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 492.30 | -0.60 | -0.12% |
| Silver | 8.13 | -0.04 | -0.49% |
| PHLX Gold and Silver Index | 116.26 | -2.8 | -2.35% |
| AMEX Gold BUGS Index | 248.7 | -6.11 | -2.4% |
Oil Market
Oil lost ground, shedding $0.13 per barrel, closing at $58.71 per barrel. The Oil and Gas Index (XOI) shed 6.3 points (0.62%), closing at 1007.91
- Amerada Hess (AHC) -$1.13 (0.85%) to $131.58;
- TotalFinaElf S.A. (TOT) -$1.04 (0.8%) to $129.11; and
- BP (BP) -$0.54 (0.79%) to $67.85.
The Oil service stocks (OSX) Index added 0.28 points (0.15%), to 181.64
- Weatherford International (WFT) +$1.63 (2.33%) to $71.66;
- Rowan Companies (RDC) +$0.33 (0.88%) to $37.70; and
- BJ Services (BJS) +$0.28 (0.77%) to $36.72.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 330.42 | -0.45 | -0.14% |
| Crude Oil Light Sweet | 58.71 | -0.13 | -0.22% |
| Heating Oil | 1.7488 | -0.05 | -2.62% |
| Natural Gas | 11.62 | 0.01 | 0.05% |
| Unleaded Gas | 1.5278 | -0.02 | -1.32% |
| AMEX Oil Index | 1007.91 | -6.3 | -0.62% |
| Oil Service Index | 181.64 | 0.28 | 0.15% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 91.39 | -0.1 | -0.11% |
| Euro | 1.1819 | -0.0001 | -0.01% |
| Yen | 118.73 | -0.01 | -0.01% |
| Sterling | 1.7239 | 0.0015 | 0.09% |
| Australian Dollar | 0.7377 | 0 | 0% |
| Swiss Franc | 1.3111 | 0.0006 | 0.05% |
| Canadian Dollar | 0.8529 | 0.0014 | 0.16% |
