MARKET WRAP – A RARE DOWN DAY

Stocks fell 0.6% today as investors locked in some gains, consumer credit data came in worse than expected and comments from several Fed chiefs failed to move stocks higher.  As stocks have melted higher investors have grown increasingly concerned about expectations being priced into stocks.  The recent rise in equities already implies a very strong earnings season, endless accommodative Fed policy and little to no global risk.  Today’s action was the result of a bit of tempered expectations.

Volume was relatively moderate when compared to historical averages though substantially higher than average volume in recent weeks.  Breadth was negative at 2:1.  The dollar rally didn’t help matters as the Euro continued to sell-off as Greek CDS spreads continued to spike and Greek bond yields surge.  The concerns in Greece just won’t go away and are unlikely to any time soon.

From Daily Futures:

U.S. Economy
The Mortgage Bankers Association’s index of mortgage applications was down 11% last week. The average rate on a 30-year fixed rate mortgage climbed from 5.04% to 5.31%, the highest since August of 2009. May lumber fell $2.90 to $290.10.

The U.S. Treasury sold $21 billion of 10-year T-notes at a median yield of 3.87% with a bid-to-cover ratio of 3.72. The yield was lower than expected and the bid ratio was the highest since 1994. The June U.S. T-bonds jumped up 1.09/32nds to 115.22/32nds.

Grains and Cotton
Yesterday’s 6 to 10 day forecast from the National Weather Service is expecting above average precipitation over the winter wheat crops in Kansas, Oklahoma, and Texas. July wheat finished up 11.75 cents at $4.89, the highest close in over a week.

Some are guessing that China will soon allow the yuan to rise. If so, U.S. soybeans will look more affordable to them. May soybeans closed up 8 cents at $9.525.

Energies
The U.S. Energy Department (DOE) said that crude oil supplies were up 2.0 million barrels last week to 356.2 million barrels. Supplies of gasoline were down 2.5 million barrels and heating oil supplies were up 600,000 barrels. June crude oil was down .88 at $86.51.

The DOE also said that refinery use increased from 82.6% to 84.5% of capacity last week. Over the past four weeks, gasoline demand was up 1.7% from a year ago while distillate demand was down .2% from a year ago.

Metals
June gold closed up $17.00 at $1,153.00, the highest in twelve weeks, after Federal Reserve minutes showed a continued commitment to keeping the federal funds rate low. There is also talk that Europeans are turning to gold to hedge their currency losses.

Currencies
Eurostat said that real GDP in the EU-27 was up .1% in the fourth quarter of 2009 and down 2.3% from a year ago. It was the same estimate as a month ago. The June euro closed down .0022 at $1.3372.

An index of services in the U.K. fell from 58.4 to 56.5 in March, weaker than expected, but still a sign of expansion. The June British pound ended down a tick at $1.5267.

The Bank of Japan lowered its key interest rate to .1% in December of 2008 and today, they agreed again to keep it there, as expected.

Statistics Canada said that building permits were down .5% in February to C$5.7 billion.