Market Talk

US stocks rally for a second straight day, as markets overcame disappointment over what the ECB didn’t do, focusing instead on what it did do.

DJIA jumps 107 (1%) to 11362, S&P 500 gains 15 (1.3%) to 1222 — the second time this year it’s been up more than 1% two consecutive sessions — Nasdaq Comp rises 30 (1.2%) to 2579.

This put stocks close to two-year highs. That’s something that was hit in the oil patch, as crude rises to a two-year high of $88/bbl.

Yeah, that’ll be great for the consumer.

US stocks close down around the lows they first hit this morning, as the latest batch of economic news on both sides of the Atlantic sows doubt about the recovery.

European economic data jolt the risk trade early, before the start of trading over here. Weekly jobless claims here rise to 465,000, and because of that, odds are it’s going to be another glum September jobs report. Existing home sales rise, but given last month’s record plunge, it’s cold comfort. The housing market still remains mired deep in its historic slump.

DJIA falls 77 to 10662, S&P 500 loses 9 to 1125, Nasdaq Comp eases 7 to 2327. Dow’s now on a little two-day losing streak. S&P falls back under key 1130 level. NYSE volume’s a little better than it was yesterday, but at 3.8B shares traded, still under even the 4B mark, that’s still light compared to what might be considered a “normal” market.

Gold hits another nominal record close at $1,294; still under $1,300 though.The 10-year yield actually backed up to 2.55%, after threatening to fall under 2.50%.

It was an interesting trading session for stocks, and followed a trend we’ve been noticing lately. To wit, the market sold off in the first hour, spent the rest of the day working off those losses, only to slide in the last hour back near the lows. In other words, all the action, the defining action at least, took place in the first and last hour. We’ve seen this a number of times, with prices moving in both directions. Call it the rise of the bots.

The tea leaves are shifting.

US stocks looking weak (again) today following the lead of European bourses, where stocks are falling amid rising concern (again) about the state of the European economy. Ireland posts negative GDP, and Eurozone output falls sharply. This is also ratcheting up (again) the credit concerns.

Again, again, again. How many people thought Europe’s problems were over? You’ll get at least a rough idea by how far stocks fall. This whole move off the August lows has basically been a repricing of stocks, under the assumption (again) that the worst had passed.

Another thing that’s got the risk trade jittery is a hint from the Irish that bondholders of Anglo Irish, the big bank that the government was forced to take under it wing, may not get all of their money back. Making creditors “whole,” as they say, even at (well, always at) the expense of the taxpayer has been a hallmark of our global “recovery.” It’s about time somebody made the debtholders shoulder their share of the burden. For this at least, Irish eyes should be smiling.

On this side of the pond, Blockbuster finally succumbed, and filed for bankruptcy protection. Jobless claims at 8:30 a.m., existing home sales and leading indicators at 10.

S&P futures down 7 (keep an eye on the 1130 level,) DJ futures down 56. Ten-year yield down a hair at 2.53%. Crude’s down about 0.7%, gold’s flat at $1,292/ounce, and the euro’s weaker at $1.3331.

US stocks rally sharply, after the NBER officially calls the recession over, and the S&P 500 vaults over a key technical threshold.

DJIA jumps 146 (1.4%) to 10754, its highest close since May 13. S&P 500 rises 17 (1.5%) to 1143, finally breaking over the 1130 level. Nasdaq Comp surges 40 (1.7%) to 2356. NYSE volume continues to be low. But the stock rally doesn’t take away from Treasurys, which manage to rise as well, with the 10-year yield falling to 2.70%. Gold also rises, hitting a nominal new closing high of $1,279.

NBER surprises with its call that the recession ended in June 2009; still, it’s the longest recession of the post-War period, and by no means does it mean the nation’s problems are over. Street likes Lennar profit, but home-builder sentiment remains deeply in the doldrums.

Here’s a new feature we’re working on for WSJ.com, the Market Hub Minute. For this first one, we focus on Lennar, which swung to a fiscal third-quarter profit this morning.

The tech folks set up a little camera on my desk, and a Skype account on my computer, so now I can spout off at just about any, ahem, minute.

What's got these guys all jazzed up, huh?

The stock market has been recording pretty strong gains so far in September, all the more notable since September is historically such a lousy month. The proverbial double-dip fears are receding – on the Street, at least (if you’re on that other street, Main Street, it doesn’t matter whether or not it’s called a double-dip. It’s lousy and it’s been lousy.)

Okay, so what’s doing it, right? That’s the question. Have the economic tea leaves shifted that significantly? We could write a 1,000-word post deconstructing the various data points, the ISM, the August jobs report, the weekly jobless claims, the housing numbers, the GDP report. But there’s not much point. We’ve been over that ground before. I think losing 54,000 jobs overall in August – the third consecutive losing month – is more significant than the 67,000 private sector jobs that were added. You agree or you don’t.

But make no mistake, the Street has seized on the “better-than-expected” data points to help it climb from the bottom of the trading range it was about to break through in August. But the numbers haven’t been good enough to take the market above the trading range, either (and we’re broadly calling this range between 1040 and 1130 on the S&P 500.)

Then there’s this notion floating around that the Republicans are definitely going to take back either one or both chambers of Congress in the mid-terms, and since the GOP is perceived as more business-friendly, that’s good for business and the stock market. That is definitely a second cause.

But, once again, we have to wonder if it’s the Fed again, trying to goose the wealth effect.

Continue reading…

Irish eyes are not smiling this morning.

So equities traders here in the old USA aren’t worried about European debt today, it seems judging by stock futures, whereas yesterday they were all in a tizzy about it. Does that make sense? No, it doesn’t, so you should ignore the stock moves (unless, of course, you’re actively trading, in which case, all that matters are the numbers,) and focus on, you know, the news. And the news is still coming out of Europe.

The cost of credit default swaps on Irish debt hit a record today on increasing worries over the state of Irish banks. This after the government extended its blanket guarantee of private banking debt (was supposed to run out the end of this month, now they’re extending it to the end of the year. Just seems like nobody can get those exit strategies kicking in, can they?)

Neil Shah reports over at MarketBeat:

Ireland, which is grappling with an increasingly costly bailout for troubled lender Anglo Irish Bank, isn’t alone. Concerns about the health of Europe’s banking system have unleashed a wave of risk aversion that is engulfing other countries on Europe’s fringe too. Portugal’s credit-insurance costs have jumped to $342,000 from $330,000, while Greece’s costs have hit $916,000 from $895,000.

It’s not just Irish CDS, either. Spreads on bond yields between Germany and some of the so-called periphery countries are rising. The spread between Greek bonds and German bonds is at a four-month high of 948 basis points, very close to the record 973 it was sitting at before the Europeans unveiled their grand bailout plan.

That tells you that despite the near trillion dollar safety net the Europeans threw at their collective economies, investors are still worried. It’s not at panic levels, but beads of sweat of forming on the collective European brow.

US stocks rise for a second session, albeit not as sharply as during yesterday’s rally, as another batch of economic data gives some hope to the bulls.

DJIA rises 51 (0.5%) to 10320, S&P 500 gains 10 (0.9%) to 1090, Nasdaq Comp up 23 (1.1%) to 2200. NYSE volume’s low.

Today, it was a better-than-expected report on pending home sales that the bulls seized on. Jobless claims remain disturbingly high as 472,000, but no matter there’s a rally on. Dell bows out of 3Par sweepstakes after H-P raises its bid to $33/share.

Of course, what really matters is tomorrow morning’s monthly jobless report.

US stocks burst out of the gate in September, with the DJIA posting its best one-day gain since early July after a key gauge of the manufacturing sector shows surprising strength.

DJIA surges 255 (2.5%) to 10269, its biggest one-day gain percentage-wise since July 7. S&P 500 jumps 31 (3%) to 1080, Nasdaq Comp rises 63 (3%) to 2177. NYSE volume is 4.5B shares traded, not bad volume for a session a couple days ahead of Labor Day.

Stocks rose sharply early, as traders were apparently emboldened after the S&P held the 1040 level again yesterday. But the ISM reading, coming in not just better-than-expected but actually better, was like rocket fuel. September has a reputation for being a bad month for stocks, but it also often starts off well. It did today.

Now, that lede (newspaper jargon for “lead,” the top of the story, not  be confused with lead, the material they used to use to fill the letter blocks when printing the paper,) I wrote is without a doubt a concise, accurate assessment of today’s session, if I do say so myself. However, I find it hard to believe this rally was built on anything more lasting that Friday’s rally, which had just about completely melted away by yesterday’s closing bell.

Briefly, let’s look at some of the news today. There was that Chinese PMI story. China’s official PMI rose to 51.7 from 51.2. That sparked the global stocks rally. Now, that’s a very minor move, one that still leaves the index too close to the 50 level for comfort in a diffusion index that measures not actual change but the rate of change.

Still, with the proverbial new money pouring into the market, that was enough to get things going. The market totally ignored a trio of private-sector takes on the jobs market, the ADP, TrimTabs and Challenger Grey reports. ADP said private-sector jobs fell 10,000, TrimTabs said it was down 65,000. The Challenger report was actually bullish, they said job cuts fell to a decade low. Still, those first two do not presage a good number Friday when the BLS reports the nonfarm payrolls. But no matter, because the ISM’s take on US manufacturing came in at 56.3, up from 55.5, when it was expected to slide to 52.

What makes it so surprising is that absolutely everybody expected it to fall, given that the regional Fed surveys have been uniformly depressing. So, is the ISM number a one-off or some counter-trend? I just don’t know yet, but I’m very suspicious of the ISM number. It just doesn’t fit in with anything else we’ve been seeing.

Lastly, we’ll leave you with this, a tidbit that John pointed out to me just now. As bad as August was for stocks, May was that much worse, with the DJIA losing better than 8%. What’d the Dow do on the first trading day in May? It rose, about 143 points. Over the next four sessions, it lost 771 points, a time frame that included the now-infamous Flash Crash.