YAHOO [BRIEFING.COM]: Coming off of the strongest quarterly
performance since 2008 and the best first quarter since 1998, stocks scored
strong gains on Monday, but things weakened from there.
A better-than-expected ISM Manufacturing Index helped stimulate
buying interest at the beginning of the week. The effort gave the broad market
a new multi-year closing high.
Sentiment soured on Tuesday as participants responded to some
surprisingly hawkish verbiage contained in the minutes from the most recent
FOMC meeting. Although the idea that the Fed’s guidance will be conditional on
economic developments shouldn’t be surprising, many regarded that view as
anti-quantitative easing rhetoric. Selling dropped the stock market to a 1%
loss before it began to rebound.
Data on Tuesday was limited to a relatively in-line increase in
factory orders of 1.3%.
Selling extended into trade on Wednesday, forcing the S&P 500
to a 1.0% loss for only the second time in 2012. Lingering uncertainty about
monetary policy following the FOMC minutes played a part in the downturn, as
did renewed concerns about sovereign debt. The latter theme was made clear by
the increase in yields on
Domestic data didn’t do anything to stem losses. The ISM Services
Index, which came in at 56.0, declined more than what had been generally
expected to follow the 57.3 that had been printed in the prior month.
The ADP Employment Change indicated that private payrolls increased
by 209,000 during March, but that was slightly less than the increase of
217,000 that many economists had expected. The report is usually regarded as a
preview of the official monthly payrolls report.
Action on Thursday was listless and lackluster. It left the S&P
500 to suffer its third straight loss, although the move lower was only slight.
Still, with the
In the backdrop was another rise, albeit a modest one, in yields of
The latest weekly initial jobless claims tally was shrugged off. At 357,000 it
was on par with what had been broadly forecasted.
Tech, the largest sector by market weight, traded with a solid gain
for the better part of the day, but the broader market was reluctant to follow
its lead. Tech’s strength was more distinguishable in the Nasdaq, which outperformed its counterparts for the
duration of the day.
Consumer Discretionary stocks outperformed for almost the entire
session and booked a 0.7% gain, helped by a raft of retailers that reported
some impressive same-store sales results. A better-than-expected quarterly
report from Bed Bath & Beyond (BBBY 71.85, +5.62) helped shares of the home
furnishing outfit bound to a new record high.
Materials stocks ran up to an early gain on the order of 1% before
rolling over. The sector settled the session with a 0.6% loss. Energy stocks
also failed to hold early gains; they suffered a 0.5% loss.
Despite the downturn among natural resource plays, most commodity
futures prices traded higher so that the CRB Index booked a 0.5% gain. The
bounce by commodities came after they had suffered steep losses during the
course of the two previous days, including a near 2% drop for the CRB that
stands as its worst single-session slide of 2012. Those losses were largely
driven by the tone of comments included in the FOMC minutes.
The FOMC minutes were a positive catalyst for the dollar this week.
With a 0.4% gain on Thursday the greenback enters Friday with a week-to-date
gain of 1.3%. Currency markets will be open on Friday even though
Most of the dollar’s advance this week came against the euro, which
enters Friday at a three-week low of $1.306, down 2.0% week-to-date. Earlier
this week the European Central Bank opted to keep its target interest rate at
1.00%, while the Bank of
May crude oil began pit trade near the unchanged level,
but advanced as trade progressed. Strength came in contrast to its
previous session when crude took the week’s largest losses after seeing
pressure following inventory data that showed a greater-than-expected build of
9.0 mln barrels. Earlier in the week, the energy
component also saw losses after a hawkish tone to FOMC minutes fueled selling.
Crude settled today’s floor session with a 1.7% gain at $103.29 per barrel, up
0.2% for the week.
Natural gas sold-off in response to inventory data that showed a
build of 42 bcf when a build of 30 bcf was expected. It touched lows of $2.08 per MMBtu before settling its floor session with a loss of 2.3%
at $2.09 MMBtu. Overall, natural gas closed 1.9%
below the previous week’s closing price.
Precious metals managed to do well after taking sharp losses in the
prior session due to FOMC minutes. Strikingly, their rebound came despite
strength in the dollar. Both June gold and May silver trended upward
during pit trade, reaching session highs of $1634.00 per ounce and $31.81 per
ounce, respectively. Gold settled floor trade at $1629.90 per ounce, 2.3% below
last week’s close, and silver settled at $31.71 per ounce, 2.3% lower than
Friday’s close.
As an aside, the
Recent PMI data from