DIA -.60%, SPY -.68%, QQQQ -1.54%
10-Year Treasury +12/32 to yield 4.25%
With little economic news, the market traded on earnings reports and the general perception of the economy. Costco reported lower then expected earnings and some of Kodak's bonds were downgraded to junk status. In addition, traders did not want to hold positions going into the weekend. Although reports that North Korea would test a nuclear device sent the markets lower with about an hour to go, buying programs kicked in to prevent the market from closing at the day's lows. Decliners led advancers on the NYSE by a 19-12 margin, which the ratio for the NASDAQ was 2-1.
The 10-Year Treasury rose 12/32 to yield 4.25%. Some of today's move was the result of credit downgrades in the corporate bond market, as traders moved money at least temporarily into the safe haven of Treasury bonds. In addition, the Treasury market benefited from stock's declines. The report on North Korea's possible nuclear test added to investors' flight to safety. Finally, there is simply concern about the US economy hitting a soft patch.
Oil rose 2.2% to close at $55.39/bbl. Yesterday's fears of a refinery shortage were a primary reason for today's rise. Because US refineries are already operating near capacity, working refineries are not able to pick-up any slack in case of a plant failure. A weekly drop in gasoline inventories raised concerns about gasoline supply going into the summer driving season. In addition, the phrase "terror premium" - caused by the possibility of a slowdown in production from a terrorist attack -- returned to traders' vocabulary.
The dollar fell .8% versus the Yen and .2% versus the Euro. Talk of a possible revaluation of China's Yuan was the primary reason for the Yen's strong upward move. In addition, Japan's prime minister formally apologized for issues related to Japan's actions during WWII.