MARKET WRAP – A LAST MINUTE SNAPBACK RALLY

Stocks staged a 1%+ rally in the final 15 minutes of trading today to cap off a nasty week in the equity markets.   We’ve seen this in the final minutes of the last few Friday sessions as short covering and buying leads to a last minute rally in stocks in anticipation of the Monday Melt-up.  Whether that is the cause of today’s huge move is unknown, but it certainly looks like no one wants to be short into Monday morning.

Volume was very heavy on the day and breadth was overwhelmingly positive at 3:1.  The market was incredibly volatile all day after opening down 1.5% before rallying to finish with 1.4% gains.  Unfortunately, it’s difficult to chalk this one up as anything other than a brief celebration of a FinReg bill that wasn’t as harsh as expected and a brief reprieve from very oversold conditions.  The credit markets were a bit more mixed as the TED spread rose by 5%.  LIBOR/OIS was also a bit wider on the day.  This looks like a clear sign that today’s rally was purely an oversold bounce.

From Daily Futures:

U.S. Economy
The June U.S. T-bonds are steady higher, seen as a safe haven from the world’s financial problems.

This week’s market worries? Europe’s ongoing debt problems and connected concerns that budget tightening in several nations will restrain world growth. Also, several unknowns about the specifics of financial reform in Europe and the U.S. So far, the stock market is steady to higher and that helped several commodities to finish the day higher.

Grains and Cotton
The USDA said that ag exports totaled $59 billion in the first half of 2009-2010 and they expect exports to hit $100 billion by the end of the fiscal year at the end of September. So far, China has been the largest customer, accounting for $10.6 billion of sales. July corn closed up 7 cents at $3.69, up from this week’s lows.

The USDA said that China bought 120,000 tons of U.S. soybeans for 2010-2011 and 118,000 tons of U.S. corn for 2009-2010. 58,000 tons of the corn sale was previously reported as going to unknown destinations. July soybeans ended down 6 cents at $9.38.

Livestock
After the close, the USDA said that frozen pork in storage totaled 482.5 million pounds on April 30th, down 21% from a year ago and much less than expected. Frozen bellies totaled 50.2 million pounds, down 37% from a year ago and less than expected. August hogs were up .22 at 82.32.

After the close, the USDA said that there were 10.453 million head of cattle on feed as of May 1st, down 3.4% from a year ago and slightly less than expected. Placements in April were up 2% while marketings were down 1%. August cattle ended up .15 at 90.62.

The USDA said that beef production totaled 2.14 billion pounds in April, up slightly from a year ago. Pork production totaled 1.85 billion pounds in April, down 4% from a year ago.

After the close, the USDA estimated this week’s beef production at 511.0 million pounds, down 2.8% from a year ago. Pork production was estimated at 411.6 million pounds, down 1.8% from a year ago.

Cocoa
According to Agrimoney.com, Fortis Bank Nederland increased its estimate of a world cocoa production deficit from 124,000 to 136,000 tons in 2009-2010. For 2010-2011, they expect consumption to fall short of production again, by just 3,000 tons. July cocoa finished up $56 at $2,895.

Orange juice
After the close, the USDA said that there were 1.38 billion pounds of frozen orange juice concentrate in storage on April 30th, down 3% from a year ago. July orange juice ended up 1.45 cents at $1.4670.

Sugar
July sugar closed up .66 at 15.65 ahead of this afternoon’s USDA world sugar supply and demand estimates.

Metals
July copper bucked the trend of market fears and closed up 11.65 cents at $3.0610, probably helped by bargain-hunters.

August gold closed down $12.50 at $1,177.90, concluding a week of profit-taking after last week’s record highs.

Energies
July crude oil closed down .76 at $70.04 while analysts revised their world growth estimates lower.

Currencies – Euro Finishes The Week Higher
A composite index of services and manufacturing for the Euro area fell from 57.3 to 56.2 in May, weaker than expected, but still a sign of growth. The June euro is trading higher.

Statistics Canada said that the consumer price index was up 1.8% in April from a year ago, up from an annual gain of 1.4% in March and more than expected. Also, retail sales were up 2.1% in March to C$37.0 billion, better than expected. Will the Bank of Canada raise the interest rate when it meets on June 1st? The June Canadian dollar is steady to higher.

The U.K.’s Office for National Statistics said that the government posted a budget deficit of 10.0 billion pounds in April, the largest since monthly records began in 1993, but it was less than expected. For 2009-2010, the U.K. posted a record high deficit of 156.1 billion pounds, also less than expected.

The Bank of Japan met and kept its interest rate unchanged at .1%, as expected.