Market Talk

Bears get in some swipes today as US stocks retreat, though there was never really a sense that the selling could get out of hand. Markets were overdue for a pullback, and no reason to think bulls have lost the initiative, particularly after another stealthy late dash into the bell that slices declines roughly in half.

Economic data doesn’t prove to be much of a catalyst for either camp. Weary bulls phoned it in, and rest to fight another day.

Energy, materials hit hardest. Dow Industrials down more than 140 at their low, end the session off 65.63 at 8675.24. Nasdaq Comp falls 10.88 to 1825.92, and S&P 500 ends 12.98 lower at 931.76.

Weekly jobless claims tomorrow, should be interesting to see if continuing claims will keep pressing into uncharted territory. We’ve seen some stability in the initial claims lately, but the more-important continuing number hasn’t gone down for 17 straight weeks.

Unemployment may breach the 9% level, but for folks who still have jobs, they’re having a much easier time getting to work. Freakonomics reports traffic congestion’s down about 30% in 99 of the country’s 100 largest metro areas.

Economy seems to be transitioning away “from a heightened risk of deflation to the absence of that risk,” James Picerno writes at The Capital Spectator. But don’t confuse this transition with immediate inflation.

A couple of volatility indicators are offering mixed signals, Bespoke Investment Group says. The S&P 500′s 50-day moving average is showing daily moves way down from late 2008, but the VIX is creeping up above 30.

Pimco’s Mohamed El-Erian offerstwo conclusions from Ben Bernanke’s congressional testimony, in which the Fed chairman says the US will see economic growth later this year, but it won’t be robust.

Morgan Stanley economists expect a 500,000 plunge in May non-farm payrolls Friday.

“The recent sharp divergence in the initial and continuing claims series creates considerable uncertainty regarding the state of the labor market. We suspect that the pace of job loss has started to moderate on an underlying basis – but signs of any moderation remain quite tentative at this point,” firm says.

Expect another sizable decline, with significant job losses in manufacturing, construction, temp help and retail.

And the expected drop in payrolls would be even worse if not for an expected 75K additional census-related government hirings.  Morgan Stanley pegs May jobless rate at 9.1%. Economists surveyed by Dow Jones look for around 525,000 jobs lost, rate rising to 9.2%.

Baby, all this rallying's done wore me out!

US stocks finding it hard to gain any upward traction so far, after falling at the open and easing further following a dose of economic data.

Perversely, Dow Industrials are being hurt significantly today by a drop in oil prices, with declines in Chevron and Exxon Mobil combining for about 20% of the Dow’s drop.

Materials also hit hard; industrials and consumer discretionary — arguably beneficiaries of lower energy prices — also notably weak.

More than any data reading or event, bulls just seem a little tired, in need of some rest.

May ISM services index and April factory orders weren’t necessarily any worse or better than the stuff we’ve seen stocks rally on lately, nor was there anything new or different in Bernanke’s visit to the Hill.   

DJIA off 125; Nasdaq down 26; S&P 500 off 19.

Prior to today’s open, S&P index analyst Howard Silverblatt picked up on a bit of market symmetry. The S&P 500 closed yesterday at 944.74, some 39.6% above its March 9 bear market low of 676.36, he notes. With the close, S&P 500 was also 39.6% away from its all-time high of 1565.15 in October 2007.

That means $2.36B of stock value has been recovered since the low. But there’s still $5.55B in lost value from the all-time high.  

(Karen Talley contributed to this report.)

Mixed action overnight, with stocks in Hong Kong and Tokyo rising, and markets moving lower in Europe. US stock futures a little lower premarket, with investors perhaps being a bit more watchful ahead of some economic data and Fed chairman’s visit to Capitol Hill. And as we noted late yesterday, maybe there’s also some buyer fatigue creeping in.

ADP’s May employment estimate due at 8:15am. Not always the most accurate reading, but does a decent job of softening up investors and refocusing expectations for the real number on Friday.

April factory orders, May ISM services index set for 10:00am, and Bernanke testifies before a House panel about the same time. S&P futures off 5.10; 10-yr higher, yield at 3.57%.