YAHOO [BRIEFING.COM]: The long
and short of things Tuesday is that the stock market remained biased toward the
long side. There were half-hearted attempts to drive the market lower,
but as soon as they started, it wasn't long before they were snuffed out with
renewed buying interest.
For the most part, the session
progressed on an unventful note. The major averages held to narrow
trading ranges, sporting modest gains for a good part of the day thanks to the
relative strength exhibited by the industrial (+1.1%) and semiconductor (+2.3%)
sectors. However, there was a late-day breakout when the S&P 500
cleared last week's high of 1169.84.
The late move was a
broad-based affair that saw all sectors participating, but a surge in buying
interest in the influential financial sector (+0.8%) lent some added
weight to the advance, as did a continuation move in the red-hot consumer
discretionary sector (+0.4%). The latter is up 16.5% from its intraday
low on Feb. 5.
By and large, the elements of
an economic recovery trade were evident again Tuesday.
The basic materials (+1.3) and
technology (+0.9) sectors joined with the industrial and financial sectors to
outperform the market. Additionally, small-cap stocks, which trailed
early, regrouped and handily outperformed their large-cap counterparts.
The Russell 2000 gained 1.1% and is now up 19% from its intraday low on Feb. 5.
The stock market was hindered
early by reports discussing a rift developing in the eurozone with respect to
EU-funded aid for Greece should it be needed. The headlines on that
matter changed by the hour, yet the headlines tended to favor the notion that
Germany will ultimately come around to support an EU plan for Greece should it
be needed.
That favorable sense of things
was reflected in a narrowing of 5-year credit default swap spreads for all
members of the PIIGS contingent, which includes Portugal, Italy, Ireland,
Greece and Spain.
The stock market at the same
time couldn't help but respect the idea that a period of consolidation is in
order after such a big run in the last six weeks. Accordingly, the market
traded gingerly in the early going. Soon, though, the recognition that
stock prices again held up to selling pressure attracted more buyers fearful of
missing out on further upside (and/or shorts fearful of seeing further upside).
The trade then fed on itself
with the late-day break of technical resistance. The end result was that
the major averages closed near their best levels of the day and the S&P 500
recorded its best closing level in 18 months.
The 10-year Treasury note
dropped 7 ticks, bringing its yield up to 3.69%. Losses were extended as
stocks rallied late.
The $44 bln 2-year note
auction went reasonably well with a bid-to-cover of 3.00, but it was still
regarded by the market as a slight disappointment given the high yield of 1.00%
and the understanding that the bid-to-cover trailed the 3.10 average of the
past 10 auctions.
Tuesday was a day that
predominately belonged to stocks, although the U.S. Dollar Index (+0.3%) fared
well in the wake of weaker-than-expected inflation data seen in the U.K., the
political discord surrounding Greece, and the optimism about economic prospects
in the U.S.
February existing home sales
declined 0.6% (consensus -1.1%) in February to a seasonally adjusted annual rate
of 5.02 mln units (consensus 5.00 mln). That was 7.0% higher than the
year-ago period.
An afternoon bounce in the
dollar index caused gold and silver to pullback from their highs, at $1108 and
$17.15, heading into the close of pit trade. Both metals finished the day in
positive territory despite the late session strength in the index. April gold
futures finished up 0.3% to $1103.70 per ounce. May silver futures closed
higher by 0.5% to $17.027 per ounce... Crude oil had a very quiet afternoon, as
it chopped around just above the flat line near the $82 level. The market is
eyeing tomorrow's inventory data, scheduled to be released at 10:30am ET. May
futures finished higher by 0.4% to $81.91. Natural gas ticked higher in
afternoon trade, and attempted to take out its highs, at $4.217. It came up
short of those levels, but still finished the session comfortably higher. April
futures finished higher by 1.3% to %4.135... Sugar futures extended their sell
off into the close, finished lower by over 7% to $0.1657. Sugar's 8-month lows,
and its third consecutive down day, reflected concerns about substantial output
coming from Brazil.
On a related note, Treasury
Secretary Geithner testified on housing finance/reform before the House
Financial Services Committee. His remarks went about as expected as he
acknowledged the government-sponsored enterprises won't exist in their current
form after changes are made, that reforming them will be complicated, and that
nationalization is not an attractive option.
The spotlight in Washington
D.C., though, shined on the White House where President Obama signed the Health
Care Reform Bill into law.
Trading volume across U.S.
stock exchanges picked up some from Monday. A total of 8.06 bln shares
traded, which is still 7% below the 50-day moving average.
Volume failed to top 1.0 bln
shares at the NYSE, yet advancing issues easily outpaced declining issues by a
nearly 3-to-1 margin. At the Nasdaq that margin was compressed to a
2-to-1 margin in favor of advancing issues. DJ30 +102.94 NASDAQ +19.84 SP500 +8.36
NASDAQ Adv/Vol/Dec 1794/2.30 bln/861 NYSE Adv/Vol/Dec 2195/984 mln/815