MARKET WRAP – STOCKS CLOSE A BIT HIGHER

Stocks closed 0.15% higher today in a seasaw day.  Stocks opened lower, but rallied almost 1% in the morning and afternoon before selling off dramatically into the close.  Stocks held onto their gains, but a low volume morning advance on no news was turned around on the highest volume of the day which came to the downside.  This is a microcosm of what we have seen in recent months – low volume ascent and high volume descent.

It was a fairly curious day for most asset classes.  The breadth in the advance is certainly thinning and finished today at just 1.2:1.  The dollar rallied against most currencies and oil finished 0.7% lower.  High beta names were again strong performers as the Nasdaq 100 and Russell 2000 advanced 0.5% and 0.4%.  Whether these are the telltale signs of an intermediate top or a strong appetite for risk has yet to be seen.   The VIX was once again higher today despite higher stocks.  After the strong move down in the VIX and recent signs of complacency this could be the surest sign of some semblance of sanity as investors reach for a bit of downside protection following the big move higher.

From Daily Futures:

U.S. Economy
The U.S. Treasury sold $40 billion of 3-year T-notes at a median yield of 1.40% with a bid-to-cover ratio of 3.13, better demand than expected.

Grains and Cotton
May corn finished down 6 cents at $3.69, ahead of tomorrow’s monthly USDA estimates. Many are still wondering if the wet and cold U.S. weather will disrupt planting schedules this spring.

Livestock
June hogs closed down .97 at 80.47 with concerns that recent price gains will temper demand for pork.

Lumber
U.S. housing demand is poor, but lumber prices remain strong. May lumber closed up its $10 daily limit at $287.00.

Orange juice
May orange juice closed down 2.15 cents at $1.4715 ahead of tomorrow’s USDA report. Some are anticipating a smaller Florida crop estimate due to January’s freezing temperatures.

Sugar
I don’t know of anyone that predicted it, but it looks like concerns of a sugar shortage are easing (see article). May sugar fell 1.25 cents to 20.32, the lowest close in seven months.

Coffee
May coffee closed up 1.65 cents at $1.3275, helped by Vietnam’s plan to buy 200,000 tons for a government stockpile.

Metals
Yi Gang, China’s decision maker on foreign exchange holdings, told a news conference that the U.S. Treasury market was still very important to China, but he was not eager to boost the price of gold. Over the long-run, he does not believe that gold is a good investment. April gold ended down $1.70 at $1,122.30.

Energies
The U.S. Department of Energy (DOE) said in today’s Short-term Energy Outlook that they expect world oil demand to increase from 84.0 to 85.5 million barrels per day in 2010, up from last month’s estimate of 85.3 mbd. They expect West Texas Intermediate crude oil to average above $80 this spring. May crude oil ended down .45 at $81.86.

The DOE also said that they expect the spot price of Henry Hub natural gas to average $5.32 per thousand cubic feet in 2010, down from last month’s estimate of $5.53.

Currencies
The U.K.’s Office for National Statistics said that total exports were down 6.9% in January while imports were down 1.6%. The March British pound fell .0087 to $1.4987.

The British Retail Consortium said that like-for-like retail sales were up 2.2% in February.

Japan’s Cabinet Office said that its coincident index increased from 97.4 to 99.9 in January, stronger than expected and the tenth consecutive increase. The March yen closed up .0046 at 1.1117.

Some leaders are starting to get it. German Chancellor Angela Merkel and Luxembourg’s Prime Minister Juncker said today that Europe and the U.S. must take quick action to regulate credit-default swaps before more financial crises occur.