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MARKET WRAP – STOCKS SOAR

5 November 2009 by TPC 10 Comments

Stocks soared during today’s session as investors digested the Fed’s accommodative stance and positive retail sales data. The potential for a consumer recovery and high liquidity has investors anticipating further economic recovery. The S&P was up 2% on the day.

U.S. Economy
The U.S. Labor Department said that jobless claims were down 20,000 last week to 512,000, less than expected. The December 2010 eurodollars closed up .055 at a new contract high of 98.495 after the Federal Reserve said yesterday that the federal funds rate is likely to stay low “for an extended period.”

The Labor Department also said that non-farm productivity was up an annual rate of 9.5% in the third quarter, the largest gain in six years. Unit labor costs were down 3.6% in the third quarter from a year ago.

Grains and Cotton
The U.S. is enjoying another day of clear skies and mild temperatures. Yesterday’s 6 to 10 day forecast from the National Weather Service is expecting above average temperatures over the eastern two-third of the U.S. with above average precipitation in the southeastern U.S. December cotton closed down .70 at 67.41.

The USDA said that, as of last week, 2009-2010 exports of:
Corn remained up 12% from a year ago.
Soybeans improved from up 9% to up 10% from a year ago.
Wheat improved from down 35% to down 34% from a year ago.
Cotton improved from down 33% to down 31% from a year ago.

Even though wheat exports improved on the year, last week’s sales were the lowest in four months. December wheat finished down 8.75 cents at $5.122.

Brazil’s Ag Ministry said that they expect soybean production of roughly 63 million tons in 2009-2010, a little more than the USDA’s 62 million ton estimate. November soybeans dropped 28.5 cents to $9.67.

Livestock
The USDA said that weekly net sales of beef totaled 9,000 tons last week, down from 11,300 tons the previous week. December cattle ended up .10 at 86.35.

Coffee
According to Dow Jones Newswires, Brazil’s coffee crop is expecting hot and dry weather this week. December coffee ended up 1.35 cents at $1.4210.

Energies
The U.S. Department of Energy said that underground supplies of natural gas were up 29 billion cubic feet last week to 3.788 trillion cubic feet. Supplies are now up 11% from a year ago. December natural gas closed up 5.7 cents at $4.782.

Currencies
The Bank of England met and kept its interest rate unchanged at .50%, as expected. It also expanded its program of quantitative easing by 25 billion pounds. Also, the U.K.’s Office for National Statistics said that manufacturing output was up 1.7% in September, better than expected. The December British pound ended down .0007 at $1.6582.

Source: Daily Futures

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10 Comments »

Rob said:

Wow. That was a fast turnaround. We might get back to 1,100 by next week. Will that be the last hurrah? (Selling opportunity) Or is a potential close above 1,100 a reason to expect a further advance (5% to 10% more) into year-end / early 2010?

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# 5 November 2009 at 1:43 PM

kbob said:

Damn. All the technicals of major indices were flashing sell signals. I’ve been all short since a week ago. Today was brutal.

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TPC Reply:
November 5th, 2009 at 1:59 PM

Cisco is a great example of why I have been telling people not to consider shorts until earnings season is over. The fundamentals still point to a higher market, but the risk/reward remains neutral/poor.

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# 5 November 2009 at 1:49 PM

Tyler said:

Well the low volume higher close day showed itself again today. SPY volume was below its average and much lower than the last several days.

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TPC Reply:
November 5th, 2009 at 2:32 PM

Does it even matter though? That has been a characteristic of this entire rally.

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Tyler Reply:
November 5th, 2009 at 2:39 PM

TPC,

I dont know what matters anymore. What I do know is that I am mostly missing out on these rallies. Another thing I dont know is whether Rosie’s fantastic analyses matter to the rest of the street?

Maybe it doesnt matter one bit whether employment is at 10% if companies are leaner and meaner and revenue is 50% from China et al?

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TPC Reply:
November 5th, 2009 at 2:44 PM

I think we’re all confused. This Fed induced liquidity driven market makes little sense to anyone. The fact that we’re so far into a supposed recovery and the vol is still 2% per day is ridiculous. It just goes to show the dangerous game the Fed is playing.

I am still hoping we retrench further before November ends, but the year end rally train may be leaving the station as we speak.

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Tyler Reply:
November 5th, 2009 at 2:45 PM

Further … ok, so a huge number of retailers have gone out of business and that’s an indicator of a bad economic situation, but for the retailer who cuts their crappy stores, leans themselves down, and grabs the market share shouldnt that be a reason to cheer?

And then all this cash “hoarding” or cash reserve building by companies that has been going on recently … isnt that a good thing for these guys? I’snt that who we wanted to buy a while back. The guys who had cash on the books? I’snt that a good thing too?