DIA -.07%, SPY -.32%, QQQQ +.27%
10-Year Treasury -25/32, yielding 4.27%
Today's bid news was the employment report, which stated the US added 274,000 jobs in April. In addition, the report revised the January and February numbers upward. The markets originally rallied, then fell to breakeven around noon. They rallied again, but sold-off at the close. The sell-off occurred partly because the 10-year Treasury sold-off primarily on inflation fears. As I commented in a previous diary, this news should have sent the markets up. Looking at a 3-month chart of all three indexes, all rallied from a double bottom formation that ended at the end of May. That rally may be losing some steam. Market internals were fair, with NYSE decliners leading advancers 16-15, while advancers led decliners by 15-14 on the NASDAQ. The up/down volume ratio was even on the NYSE, while 62% of NASDAQ volume was positive.
The 10-Year Treasury sold-off 25/32 to yield 4.27%. The market sold-off sharply at the open, and remained at that level for the rest of the trading day. The 274,000 increase in employment ignited trader's inflation fears. More jobs would lead to more income and therefore inflation.
Oil increased 13 cents to close at $50.96/bbl. The price spiked after the employment report, which indicates higher oil demand. However, the market drifted lower for the remainder of the day. There are several conflicting trends in the oil market right now. The bulls are pointing to refiners having a difficult time keeping up with the summer driving season, while the bears are pointing to high stockpile levels and record oil production. There appears to be strength to both arguments right now, explaining the markets searching for a median short-term price.
The dollar rose .5% versus the Yen and almost 1% versus the Euro. The currency markets have traded on economic expectations for the last few months, with the stronger economy rallying. A strong jobs report indicates the possibility of inflation and rising rates, which would make the dollar more attractive to forex traders. In addition, the Yen has rallied against the dollar for the last month, benefiting from the speculation of the Yuan's revaluation. From a technical perspective, the Yen is overbought and possibly due for a correction.