Stocks are flat on the week, and flat on the year, and it’s hard to see what the equities market is telling us. But the so-called “safe haven” trades are starting to chirp (although, of course, that’s liable to change at a moment’s notice.)
We also explore Kristina Peterson’s WSJ story on Briargate Trading. You think you’d like to work two hours a day? These guys do.
What's got these guys all jazzed up, huh?
The stock market has been recording pretty strong gains so far in September, all the more notable since September is historically such a lousy month. The proverbial double-dip fears are receding – on the Street, at least (if you’re on that other street, Main Street, it doesn’t matter whether or not it’s called a double-dip. It’s lousy and it’s been lousy.)
Okay, so what’s doing it, right? That’s the question. Have the economic tea leaves shifted that significantly? We could write a 1,000-word post deconstructing the various data points, the ISM, the August jobs report, the weekly jobless claims, the housing numbers, the GDP report. But there’s not much point. We’ve been over that ground before. I think losing 54,000 jobs overall in August – the third consecutive losing month – is more significant than the 67,000 private sector jobs that were added. You agree or you don’t.
But make no mistake, the Street has seized on the “better-than-expected” data points to help it climb from the bottom of the trading range it was about to break through in August. But the numbers haven’t been good enough to take the market above the trading range, either (and we’re broadly calling this range between 1040 and 1130 on the S&P 500.)
Then there’s this notion floating around that the Republicans are definitely going to take back either one or both chambers of Congress in the mid-terms, and since the GOP is perceived as more business-friendly, that’s good for business and the stock market. That is definitely a second cause.
But, once again, we have to wonder if it’s the Fed again, trying to goose the wealth effect.
Premarket posture for US stocks looks very similar to the previous few sessions, with equity futures once again nudging slightly higher.
Stocks gained in Asia overnight, currently modestly lower in Europe and euro’s stable vs yesterday’s levels. Thin menu of economic data this week and lull in corporate earnings news offers little to rouse bulls or bears in this shortened week.
July wholesale trade and inventories data due at 10:00 a.m., and the pace picks up next week, with reports on retail sales, regional manufacturing, consumer and producer prices and consumer sentiment.
S&P futures up 3.60, DJ futures up 20. Ten-year note roughly flat at 2.75%.
Slow, lazy climb
Bigger-than-expected declines in initial weekly jobless claims and July trade deficit carry stocks for a while today, with Dow Industrials threatening early to reach into triple digits on the upside.
It continues to be what Art Cashin calls a “low-volume levitation,” which nearly succumbed to evaporation as bulls showed signs of afternoon fatigue. US stocks manage modest gains, but still unable to produce an upside breakout to really demoralize bears.
Materials sector ends as the only one in the red; financials, health-care and telecom lead, but conviction still seems MIA. DJIA rises 28.23 to 10415.24, and Nasdaq Comp adds 7.33 to 2236.20. S&P 500 ends 5.31 higher at 1104.18.
Look for more aimless, wandering action tomorrow (stalking the euro), as the only notable data release is July wholesale trade and inventories.
Stocks faded this afternoon after a bouncy morning rally, and now again in the midst of a rebound. Hard not to notice that the euro, after having its own stamina issues today, is staging a similar bounce. Tight linkage between US stocks and EUR/USD continues to be impressive, matching each other’s moves yesterday almost tick-for-tick.
More of the same today, though by late morning US stocks began to strike off on their own in a move higher. Didn’t last long as the euro failed to follow along, and actually began to fade further which, from the look of the charts, brought on one of those Wile E. Coyote moments for stocks.
That brings us back to a point I made about six weeks ago: Because of their kinship since the spring, potential euro weakness likely spells risk for US stocks. We saw a mild dose of it amid Tuesday’s selloff on renewed Euro-zone bank/sovereign debt fears.
Trade deficit numbers looked much better than everybody expected, and that may mean at least that imports won’t drag on 3Q GDP the way they dragged down 2Q economic growth.
Stocks around the globe continue to gain, and that propagates a positive premarket tone for US equities. Doesn’t seem to be much in the way of rock-solid tangible drivers, but after strong gains last week and amid light trading volume, the path of least resistance has been up.
July trade deficit and weekly jobless claims both due at 8:30 a.m. ET. Similar to yesterday at this time, the euro has recovered sharply from an overnight downdraft. Oil, gold futures both higher. Gold, currently at $1,259.50, continues to press toward its all-time high of $1,265.
S&P futures up 3.10, DJ futures up 26. Ten-year note continues to say, yield back up to 2.67%.
So, the news is pretty much the same as yesterday, but the stock market is rising today, where it fell yesterday. The euro, incidentally, is at about the same place today as it was this time yesterday (although it fell overnight,) but the stock market is rising today, where it fell yesterday.
What gives? We break it down for you on the Markets Hub.
Sell-off in US stocks yesterday carried into Asian markets overnight, while European stocks currently posting moderate gains. The euro has recovered from a sharp slide overnight, which helps set the table for a modestly positive open for US stocks.
Nothing notable on the data front this morning; this afternoon the Fed releases the latest Beige Book commentary on regional economic conditions at 2:00 p.m. ET. July consumer credit due at 3:00 p.m. Revolving credit hasn’t increased since September 2008, or 21 straight months through June, a streak that seems likely to continue.
S&P futures up 4.30, DJ futures up 34. Ten-year note a tad lower, yield at 2.62%.
This is definitely a risk on/risk off market. US stocks fall as the risk trade abruptly turns off, after the old fears over Europe reignite.
DJIA loses 107 (1%) to 10341, S&P 500 falls 13 (1.2%) to 1092, Nasdaq Comp drops 25 (1.1%) to 2209. NYSE volume is very low, so it’s hard to draw any real conclusions. But while stocks fall, gold hits fresh record high. The euro fell almost a whole two cents. The 10-year Treasury yield fell to 2.61%. That all ought to tell you something.
WSJ story says European banks hid sovereign-debt risk from stress tests, but who really bought those tests in the first place? Not us. Report that German manufacturing orders slipped didn’t help matters. But what really should be catching your eye is the rising costs of credit protection for both public and private debt in Europe. In some cases, they’ve gone back to the pre-bailout levels. Ireland’s hitting up its neighbors for “support” as the state-owned Anglo Irish Bank craters (I love how absolutely everybody describes the bank as “troubled.”
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