Market Talk

The headlines tomorrow will be all about the major U.S. stock indexes posting their best first-quarter in more than a decade (and their second best ever.) It’ll make for some great bullish-sounding soundbites, and the fact that stocks are up at all given all the craziness of the 1Q is a testament to…something. But while it’s true, of course — the numbers don’t lie — it misses so much.

Just two weeks ago, the S&P 500 and Nasdaq Comp were in the red on the year, negative, down, losing ground, and the DJIA was a couple dozen points away from joining them. Now, they didn’t just rebound, they rebounded sharply, almost violently, in the face of a constant stream of bad news. Kind of makes you wonder what’s really going on, doesn’t it?

DJIA slips 31 points today (0.3%) to 12320, after Fed’s Kockerlakota suggests rate hikes could come later this year; still the index gains about 6.4% on the quarter. S&P 500 loses 2 to close the quarter at 1326. Nasdaq Comp adds 4 to 2781. Again, too, NYSE volume is low, like it’s been this entire rally. Volume equals validity, as the say on the Street, but there hasn’t been much validity in this rally.

Stocks were hardly breathing through most of today, but that late speech from the Minneapolis Fed chief Kockerlakota — suggesting rate hikes could possibly come later this year — sends markets down. So in addition to all the attention on the jobs report tomorrow, everybody’s going to be scrambling to recalculate their equations about when rate hikes are coming.

The difference between a fed funds rate of zero and 1% doesn’t mean much to the vast public — remember, it was that 1% rate that sparked the housing bubble — but it means a lot to traders, who have made a lot of money off that zero rate.