Market Talk

US stocks rise on light volume, as Treasurys sink again, despite a plethora of dour news both here and abroad, and you can be forgiven if that raises questions in your mind about just how fundamental — and how speculative — these moves are.

DJIA gains 81 (0.7%) to 12279, S&P 500 rises 9 (0.7%) to 1319, Nasdaq Comp jumps 26 (1%) to 2757. NYSE volume is about 3.5 billion shares, well below the daily average this year of about 4.5 billion. It’s the Dow’s seventh gain in the last nine sessions, which is now back within hailing distance of its year high of 12391.

Treasurys meanwhile log their ninth consecutive losing session; the yield on the 10-year is up across those nine sessions, something that hasn’t happened since 1990.

Now, here’s the news that brought all that about: housing prices fell, again, consumer confidence is down, S&P downgraded Portugal and Greece, Congress can’t agree on a budget, and the fighting in Libya rages. There’s more, of course, but you get the picture. Normally, a combination like that would not be a winning recipe for stocks. But these are not normal times.

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At the end of last week, we joked that “if the troubling headlines keep up, we could be back at all-time highs before Earth Day.” So far, so good –  the headlines are still dreary, and bulls are the ones laughing as stocks forge higher.

It remains a curious and impressive sight. An ugly March consumer confidence report, and another month of home-price declines indicating that even after prices started heading south nearly five years ago (and tens of billions of taxpayer money used for artificial support), housing still hasn’t found a bottom. And stocks rally.

Now, it’s true the downbeat numbers were in line with expectations, but that doesn’t mean they stink any less. And their implications for future activity, both for consumers and the housing industry, are grim.

Economists worked to minimize the consumer confidence tumble, saying it’s tied to high gas prices, events in the Mideast and market volatility, as if those troubles are set to disappear any day now. Consumers’ near-term outlook is considerably worse than a month ago, with fewer expecting business conditions to improve, fewer expecting their incomes to increase and fewer expecting to see more jobs. And those declines are all off of already low numbers. Continue reading…

So, the housing report tanked, and the consumer confidence data tanked. As a result, investors are heading for a “safe haven.” No, no, not Treasurys; those are down again, the ninth consecutive session they’re down, in fact. No, we’re talking about the new safe haven, of course.

Stocks.

This one completely slipped under my radar, but Treasurys are on their worst losing streak since 2002. Newswires’ Min Zeng writes:

Treasurys fall in what would be its ninth-straight session if they finish in the red, extending its longest decline since 2002. The 10-year yield is now moving to the upper band of the recent range between 3.25% and 3.5%. Safe-haven flows have been unwound amid a view that the global economy could withstand the impact from Japan, Middle East and debt woes in the euro zone. Some Fed officials have also indicated US growth is on firmer footing. S&P/Case-Shiller home price indexes are due at 9 a.m. EDT and a US consumer-confidence reading comes at 10 while $35B 5-yr sale is later today. The benchmark 10-year note is 3/32 lower, yielding 3.45%.

Now, we all know the new safe haven of choice is stocks, right?

Since Zeng’s missive, the Case-Shiller index did come out, and the report for January prices showed another slide in home prices, with prices back to where they were in the summer of 2003.  The 10-city index fell 2% and the 20-city index fell 3.1% from a year ago, and the slide pushed the indexes “closer to a confirmed double-dip for six consecutive months,” S&P said.

Of course, as Miller Tabak’s Dan Greenhaus points out, “housing can only double dip if it bounced in the first place.” The only reason housing bounced last year, he points out, was because of the home-buyer tax credit.

“By definition, a government stimulus program borrows from the future to support the now,” he writes. “Unfortunately for this particular program in this particular industry, it is increasingly clear that there was almost no future demand to borrow from.”

The 10-year yield is up a tick to 3.46%, while stock futures are still marginally higher; DJ futures up 24.

Early tone for stocks suggests we’re in for another session with tepid volume and meandering equity averages. Markets in Asia were mixed overnight and stocks are mostly lower currently in Europe, setting up a flat to slightly higher open here in the US.

Concerns about the health of Italian banks seems to be spooking European markets a little. Oil’s retreating again, earlier moving back below $103/barrel but has since regained that level.

S&P/Case-Shiller January home price index due at 9:00am, and Conference Board’s March consumer confidence gauge set for 10:00am ET. S&P futures up 3.20; 10-yr note roughly flat, yield at 3.45%.