DIA -.26%, SPY -.03%, QQQQ +.09%
10-Year Treasury +1/4 to yield 4.15%.
The market was range bound until S&P announced they were downgrading GM and Ford bonds to junk status. The market dropped after the announcement, but still ended lower for the day. Stocks were near unchanged before the downgrade, as traders are waiting for tomorrow's employment numbers. Retail sales came in mixed, with lower end retail seeing modest gains, but luxury retailers and teen stores seeing increases. The market internals were fair, with an advance-decline ratio of 17-13 on the NYSE and 15-14 on the NASDAQ. The NYSE's volume ratio was negative at 5-4, whereas the NASDAQ's was positive at 9-8.
The 10-year Treasury rose ¼, to yield 4.15%. The 10-year originally sold-off on news employment costs increased 2.2% in the first quarter, following a 1.3 increase in the fourth quarter of 2004. The higher cost number sparked some inflation fears among traders. However, the downgrade of GM and Ford started a flight to quality into US Treasury bonds. Traders are also concerned about tomorrow's employment number. Although the consensus estimate is for an increase of 193,000, there is concern the number will come in lower.
Oil increased 70 cents to close at $50.83/bbl. Yesterday,, the Department of Energy reported stockpiles again increased, this time by 2.2 million barrels. However, traders noted the increases occurred on the West Coast, which is a very insular market; oil delivered there stays there. However, there is more and more commentary stating the high level of stockpiles should lead to lower prices. Furthermore, speculators are blamed for the recent late-session increases. We'll have to wait and see which interpretation is correct.
The Dollar lost .2% versus the Yen and was near unchanged versus the Euro. The Yen has rallied against the dollar for the last week, essentially acting as a proxy for the Yuan which traders are expecting the Chinese government to revalue soon. The Euro dollar trade has stalled in the 1.28 area as traders look for firm signals from either direction. In addition, traders are nervous about taking a position in the dollar ahead of tomorrow's employment report. Estimates have been very unreliable for the past 6-9 months.
I wanted to thank San Jose Lady and all the others who offered many warm congratulations regarding my passing the Texas bar. I was deeply touched by the many compliments written.
