Market Talk

The sheer incongruity of it all is pretty amazing. Forget for a moment about how well-telegraphed GM’s bankruptcy was. An iconic American company — perhaps the iconic American company — banks out, only to be followed by a rip-roaring rally taking major US indexes up close to 3%.

More economic data that looks less bad helps re-ignite visions of 2H economic rebound. Stocks
go wild, but US dollar and Treasurys head in the opposite direction; 10-yr yield pokes back above 3.70%.

Oil also very frisky, CVX and XOM alone about 18% of the Dow’s gain. Equities trading volume is OK, but not especially convincing. Dow Industrials rise 221.11 points to 8721.44, and Nasdaq Comp climbs 54.35 to 1828.68. S&P ends 23.73 higher at 942.87.

There was a palpable sense of fear behind today’s move, but clearly a different type of fear – a fear of missing the upside train. When energy stocks (Nymex crude futures settled at $68.58, up $2.27), and consumer discretionary are two sectors among those leading the advance, there’s clearly a disconnect occurring.

The thrashing of both Treasurys and the US dollar might also give bulls some pause as they sleep on today’s big gains.

We have liftoff.

Consumer discretionary sector is blowing the doors off today, and among the S&P 500′s sector leaders.

Some major components seeing gains near 15%, including Nordstrom’s (JWN), JC Penney (JCP) and Macy’s (M). Some might attribute it to better-than-expected personal income data today, which rose 0.5% in April. But the same report showed savings increased to the highest level in 50 years of records (money that isn’t being spent on a new purse at Coach (COH) or a bracelet at Tiffany’s (TIF), which are both up 8% today.)

Oil prices are also rising and unemployment continues to grow (though at a slower pace), which you might think are negative for discretionary stocks.

Whether the markets have a rational reason to believe consumers are about stop squirreling away cash and start flinging it out of wallets again, with today’s rally consumer discretionary has made up more than a third of the distance it lost between the highs in summer 2007 and the lows of early March. Continue reading…

GM common shares trading around $1 still continues to defy conventional logic.

GM shares fell to as low as 27 cents after the automaker officially filed for Chapter 11, but have since rallied to as high as $1.01 and currently trade around 87 cents. A trip through bankruptcy court makes the shares essentially worthless, but that’s been expected for weeks and investors have still continued to buy.

GM will also be de-listed from the NYSE after today’s trading session and will begin trading on the Pink Sheets starting tomorrow.

The only explanation: these are strange times that continue to defy any sort of sensible logic, Minyanville’s executive editor Kevin Depew says.

“How is it possible to report in the same breath that General Motors is preparing to file for bankruptcy protection on the same day that Chrysler is emerging from bankruptcy without ducking under the desk to take a sip of whiskey from a flask? I don’t know either,” Depew says.

Continue reading…

Buoyancy in commodities, particularly oil, helps lift stocks overseas, with markets in Asia and Europe marking sharp gains. Those positive vibes are resonating in the US now, with premarket futures pointing to a strong open.

GM’s bankruptcy is old news as far as investors are concerned, though it’s probably cavalier to think there aren’t a host of ugly consequences lurking in the wake of GM’s bank-out.

Economic data calendar is busy this week; April personal income & spending due at 8:30am; April construction spending, May ISM manufacturing index set for 10:00am. May auto sales figures also due for release today. Also on tap this week: pending home sales, factory orders and May unemployment report Friday.

S&P futures up 14, Dow futures up 116. 10-yr lower, yield at 3.52%.