Market Talk

Stocks end lower, but reclaim most of the ground lost after mid-morning word of a strong aftershock quake in Japan.

Quake headlines and tsunami warning send a chill through a market that’s grown rather blase lately toward various pockets of global upheaval (Mideast/North Africa; Japan disaster; Eurozone debt problems). Despite the bump in volatility, trading volume remains anemic.

Industrials, financials and utilities among the weakest sectors; energy stocks finish higher as Nymex crude tops $110.00/barrel, to its highest settle since Sept 2008. Gold settles at fresh Comex high of $1,458.50/oz; silver hits fresh 31-yr high.

DJIA slips 17.26 to 12409.49, and Nasdaq Comp edges 3.68 lower to 2796.14. S&P 500 falls 2.03 to 1333.51.

Latest aftershock doesn’t appear to have done too much additional damage, but rapid, sharp plummet on initial quake/tsunami warning headlines may’ve put some fear back into a market that’s had an impressive ability to shake off troubling news.

Abundant liquidity has nurtured the risk trade, building complacency amid a hazardous backdrop as everyone thinks they can get out before the stampede begins. After glimpsing that hair trigger this morning, looks as if some risk-takers may have seen enough.

The rally refuses to yield. Stocks once again shake off some early weakness and grind out more gains, led by the energy, materials and consumer staples sectors.

Interesting feature today — Treasurys also gain, 10-yr note’s yield easing back down to 3.57% on some safe-haven buying after conflicting reports about Iranian warships heading for Suez Canal. Oil also rallied, as did gold, silver, copper, cotton, etc. Sort of a buy everything type day.

Economic data generally strengthening, but not without flashes of hotter prices, though no sign investors are nervous about inflation yet. Major averages stretch their multi-year highs, DJIA rises 29.97 to 12318.14, and Nasdaq Comp adds 6.02 to 2831.58. S&P 500 ends 4.11 higher at 1340.43.

DJIA makes it 15 winners in last 20 sessions; S&P 500 notches 16 out of 20, and up 98% from March 2009 low. Nasdaq less than 28 points from its October 2007 high.

By the way, Weight Watchers (WTW), today’s poster child for hot money and subject of an earlier post, closed at $65.39, up $20.47, or 46%. Volume was 10.5 million shares, 30-times the normal daily average for the past year. More than ample reward (way more) for a good earnings report. Another QE2 success story, right Ben?

Good year in 2010 for US stocks, not such good one for Byron Wien’s list of “top ten surprises.” As a strategist, and now Blackstone vice chair, He’s been doing this a long time. Doesn’t mean he’s getting any better at it, though.

By our count, he was completely wrong on eight of his predictions, mostly wrong on his No. 1 (GDP would grow at 5% real rate, unemployment would drop below 9%; S&P 500 operating earnings would come in above $80 — that looks safe.)

Big swing and a miss on the following:

- Fed would raise interest rates, with Fed funds rate at 2% by year end. We’ll be lucky if that one happens by 2012.

- Yield on 10-yr note would go to 5.5%. See above. Equally fanciful.

- S&P rallies to 1300, then falls below 1000 and ends year at 1115. Nice try. Not even close.

- Dollar rallies vs yen and euro, with EUR/USD dropping below $1.30. Briefly correct on that one, but didn’t last.

- Congress would pass bills providing loans and subsidies for new nuclear power plants. Didn’t happen.

- Democrats would only lose 20 House seats in November. Whoops.

- Civil unrest reaches crescendo in Iran, Ahmadinejad gets pushed out. Also didn’t happen.

- Japan’s Nikkei 225 rises above 12000. Not quite. Continue reading…

So, there’s not much going on in the stock market, but over in the gold patch, the yellow metal is once again in record territory, and crude futures are pushing up against $90/barrel again, as investors wary of the ongoing macro-mishigas as jumping into commodities.

Are advisers investing too much of their client’s money in bonds? Plus, Brett Arends gives a tip on how to play the gold market. And, there’s plenty of money to be made in tech — investors just need to know where to look.

Dow Jones reporter Veronica Dagher offers all this and more in her latest installment of the Wealth Adviser video series.

Investors today appeared to be having some second thoughts about Fed’s QE2 plan, as everything that rose in anticipation of the asset-buying program — stocks, Treasurys, the euro, oil, gold and a host of other commodities — retreat sharply. In fact, it was the theme all week.

Re-emergence of Euro-zone debt concerns, and some worries today about China moving to a tighter monetary stance are enough to turn some focus squarely back to fundamental factors. Oil, gold, Treasurys all hammered today, 10-yr note reaching highest yield in nearly two months.

Materials, financials and energy the hardest hit stock sectors. DJIA falls 90.52 to 11192.58, ends week down 2.2%. Nasdaq Comp falls 37.31 to 2518.21, and S&P 500 sheds 14.33 to 1199.21.

It’s the biggest weekly point and percentage drop for the major indexes since week ended August 13, and leaves stocks with a skinny gain for November.

Busy week for data coming up, featuring regional manufacturing reports from NY and Philly Feds; October retail sales; CPI, PPI; industrial production & capacity utilization; and housing starts.

One thing’s fairly obvious in this broad stock-market selloff today — every asset that’s benefited from a strong bid courtesy of QE2 expectations is getting hit…hard.

Metals, oil, Treasurys, stocks and the euro all tanking, after a near vertical run-up since the Fed first began to telegraph its easing intentions at the end of the summer. Maybe this selling will end as a bout of short-term profit taking. Perhaps it turns into a well-deserved correction, a consolidation of gains reaped since September. Or could it be something more? At some point, the traders who’ve piled into risky assets at the Fed’s behest will decide the easy money has been made. Time to cash out and go elsewhere. Maybe we’re near that time.

It’s been a rocky week for the Fed’s latest monetary easing plan. Outside of Wall Street, QE2 has been savaged by nearly everyone, raising questions about a program that seems hard to defend. In addition, turmoil in Europe appeared to be under wraps when the QE2 trade really began to catch on, and the latest troubles with Ireland and others in the periphery presents a big fly in the ointment. If gains in the euro — a key beneficiary of the QE2 trade — come undone, so will much of the stock-market rally since September.

We suggested Tuesday there may be some cracks forming in the QE2 trade. It’s become crowded, and we may be seeing the least-committed heading for the exit. Certainly no panic evident in today’s action. But there is a whiff of smoke.

Stocks barely budged for much of the session, but suffered a final-hour selloff and close lower for a second-straight day. The declines come despite some positive economic data and corporate deal making. Gold also broke to another all-time high, while crude oil hit a two-year high. Dow Jones’ Anna Raff, Joe Bel Bruno and I break it down on The Markets Hub.

Some interesting action in financial markets yesterday and today, with the US dollar looking perkier, euro having a harder go of it along with stocks, Treasurys retreating and gold still scorching.

Leaves us wondering just a little if the QE2 trade — buy Treasurys, short dollar, buy stocks and commodities — has reached the saturation point. Heading into the Fed’s expected QE2 announcement, we were thinking that expectations for easing were all priced into stocks, at least, and the eventual announcement would likely get greeted with more sellers than buyers. Wrong, as Dow Industrials ripped more than 200 points higher the next day.

Perhaps that was the final capper on the trade, though, since stocks and the euro haven’t made much headway since, and Treasury yields are probing back to the high end of their recent range. Gold continues to streak higher, but could be driven much more now by those searching for safe, hard assets, rather than as a weak-dollar, long-commodities play. Continue reading…

Selling the dollar and buying stocks and commodities has become a crowded trade these days, and some of the throng unwound a little today.

Session began with a negative tone as the dollar strengthened, euro weakened significantly premarket and high expectations on some earnings (IBM, AAPL late yesterday) weren’t met. Chatter about mortgage put-backs fan the flames, but it’s pretty clear from market action in stocks, gold, oil and other commodities that currencies were the key influence.

Euro gets hammered, falling well below $1.38 after flirting with $1.41 just yesterday. US dollar index up about 1.7%.

Major indexes trim losses near the close. Energy, materials and health-care lead sector decliners. IBM alone knocks 36 points off the DJIA, which falls 165.07 to 10978.62. Nasdaq Comp tumbles 43.71 to 2436.95, and S&P 500 ends 18.81 lower at 1165.90.

Data calendar tomorrow is pretty thin, with most notable item being the Fed’s latest Beige Book regional economic assessments.