US stocks rally as the bulls take back the conch from the bears, betting the global recovery remains on track despite all the noise coming out of Europe.
Stocks opened sharply higher, and never turned back. DJIA jumps 273 (2.8%) to 10173, its best one-day performance in two weeks (May 27). S&P 500 gains 31 (3%) to 1087, closing above key 1084 level. Nasdaq Comp rises 60 (2.8%) to 2219. Energy shares lead, even though crude futures gain only about 1.5%. Weak NYSE volume a red flag, but closing near session highs is a good sign. Euro back over $1.21.
News out of China shows a huge move in exports, including solid selling to Europe, giving some hope that despite everything going on in the Continent, merchandise is still moving and people are still spending. Here in the U.S., weekly jobless claims come in essentially flat at 456,000. The problem with that is that it remains in that elevated 450,000 range, which does not point to strong hiring (if any at all, really.)
Then there’s this TrimTabs report floating around, where the firm claims that, based on income-tax data (how they measure hiring) and expectations that a lot of those Census Bureau jobs are going to disappear, the economy will shed 200,000 jobs in June.
So caution is still warranted on the economic front, and on the technical front as well. There have been other rallies like today’s since the selloff began. The DJIA “surged” 285 points, or 2.85%, back on May 27, to 10259, and it “surged” 405 points, or 3.9%, back on May 10 to 10785. But both rallies came within the framework of the larger selloff that began after the April highs, and both rallies were eventually wiped off the map.
“The spike in 1% moves, as well as the increase in the daily high/low ratio, portrays the increased volatility,” S&P’s Howard Silverblatt writes. “The daily closes over the last 15 trading days add up to over a 26% absolute change, yet the index stands 1.4% higher.”