DIA -.11%, SPY +.09%, QQQQ +.36%
10-year Treasury, + 9/32, yielding 4.60%
The markets simply meandered today, searching for solid direction and not finding any. The decrease in oil was a positive, but the increase in consumer prices was a negative. In effect, these two news items balanced each other out creating a zero-sum trading day. The internals for both markets were bad. The advance decline ratio was 3-1 for the NYSE and 2-1 for the NASDAQ. The NASDAQ number is especially troubling considering the index increased today. This is a stock-pickers market. Certain issues are clearly doing well, but the overall averages may languish for awhile.
The 10-year Treasury rebounded at the end of trading, closing up 9/32 to yield 4.60%. This was a classic relief rally. Traders simply felt the sell-off had gone too far and acted. Another commentator stated he thought this was simply traders shoring up certain positions and had nothing to do with the underlying fundamentals. Bill Gross -- who manages PIMCO and is considered a "maven" of the bond market -- stated he didn't think the 10-year was attractive until it reached 4.75%.
Oil dropped 4% today, to close under $54/bbl. The Department of Energy reported that crude stockpiles increased 4.1 million barrels while gasoline supplies dropped by the same amount. This news was enough to initiate a sell-off. The market was very overbought and in need of a correction. This news from the DOE simply provided the needed catalyst. However, I heard on the news earlier of a refinery fire in Houston (where I live). This may provide an upward push because refining capacity is very tight.
The dollar rose .56 verses the Yen and .71% verses the Euro. The Fed's rate increase yesterday is still having an effect on the dollar. Higher interest rates make US assets more attractive to foreign investors. In addition, German business confidence dropped in a recent survey, adding to speculation that German growth will slow. However, another commentator noted that most of what is happening is an unwinding of short positions as opposed to outright purchases in the dollar. This indicates that while traders aren't betting against the dollar, they are not yet convinced in its long-term growth potential.
The Bureau of Labor Statistics reported that "On a seasonally adjusted basis, the CPI-U advanced 0.4 percent in February, following a 0.1 percent increase in January." This came in higher than expected, as the consensus forecast called for .3% increase. This news simply reaffirmed what the Fed stated in its release yesterday -- that the Central bank was concerned about an increase in inflation and would take the necessary measures to prevent inflation from getting out of hand.
