Stocks closed a bit higher again today as the markets cheered some better than expected news on jobs. Fears over a dramatic decline in February payrolls have been alleviated by positive readings from the ISM report and the ADP employment report. Investors are likely to look past the number regardless of the result. A weak figure will be blamed on the weather.
The market closed well off its highs for the day as investors sell into strength. This is now the second day running where we have seen a morning rally evaporate. The 7% move off the recent lows has been remarkable in many ways. The Russell 2,000 has notched 15 positive days in the last 18 while the VIX has now fallen an incredible 15 of the last 16 days. That’s a 94% success rate for those keeping track. Volume was meager once again as the volume at the NYSE came in well below 1 billion shares. Breadth was only marginally positive.
From Daily Futures:
U.S. Economy
The Institute of Supply Managements’ index of U.S. services increased from 50.5 to 53.0 in February, stronger than expected and the highest since December of 2007. The June 2011 eurodollars were down .01 at 98.51.
ADP Employer Services said that the economy lost 20,000 jobs in February. They also revised January’s figures from a loss of 22,000 to a loss of 60,000. The U.S. Labor Department will release its monthly assessment on Friday morning.
The Mortgage Bankers Association said that its index of mortgage applications was up 14.6% last week while the fixed rate on a 30-year mortgage averaged 4.95%.
The March U.S. dollar index dropped .555 to 80.020 while anxieties eased over Greece’s debt problems. Most commodities ended higher.
This afternoon, the Federal Reserve’s Beige Book said that nine of the twelve Districts showed modest improvement. They also noted that “loan demand remained weak across the country.”
Grains and Cotton
July wheat finished up 11.75 cents at $5.285, helped by today’s weaker U.S. dollar. Also, May cotton closed up 1.12 at 82.97.
Livestock
According to Dow Jones Newswires, a USDA official said that Russia is very close to allowing pork to be shipped in from the U.S. Under the new rules, exporters will have to prove that their pork does not contain the antibiotics that Russia has banned. June hogs closed up .92 at a new contract high of 82.30.
May feeder cattle ended up .0037 at a new contract high of $1.0567, helped by today’s positive economic news, but tempered by the higher corn price.
Lumber
Statistics Canada said that lumber production by sawmills totaled 3.436 million cubic meters in December, down almost 1% from a year ago. May lumber closed up $6.50 at $274.00.
Cocoa
The International Cocoa Organization said that it expects world production of cocoa to fall short of consumption by 18,000 tons in 2009-2010. May cocoa ended down $6 at $2,823.
Energies
The U.S. Department of Energy (DOE) said that crude oil supplies were up 4.1 million barrels last week to 341.6 million barrels. Supplies of gasoline were up 700,000 barrels and heating oil supplies were down 400,000 barrels. May crude oil closed up $1.20 at $81.26, the best close in six weeks.
The DOE also said that refinery use increased from 81.2% to 81.9% of capacity last week. Over the past four weeks, gasoline demand was up .1% from a year ago and distillate demand was down 4.8% from a year ago.
Currencies
Australia’s Statistics Bureau said that real GDP was up .9% in the fourth quarter of 2009 and up 2.7% from a year ago, better than expected and the best quarterly growth in over two years. Australia was the only major economy to avoid a recession in 2009. The March Australian dollar finished up .13 at 90.40.
Greece’s government gave its approval to a combination of tax increases and spending cuts that will reduce its deficit and possibly, bring in some aid from Europe (see article). The March euro closed up a penny at $1.3700.
A composite index of manufacturing and services in the Euro zone was unchanged at 53.7 in February, a sign of steady expansion.
An index of services in the U.K. increased from 54.5 to 58.4 in February, better than expected.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.