MARKET WRAP – THE DRUNKARD TURNS AROUND AGAIN

Stocks staged a remarkable turnaround today leaving the indices little changed by the close of trade.  At one point this morning stocks were trading down nearly 2%, but reversed at mid-day on no news.  No one seems to know what drove the market higher, at 1:45PM ET stocks scooted higher by 1% in less than 15 minutes on huge volume and never looked back.  The VIX was up 10% this morning and finished the day in the red.  The market had a remarkably greedy feeling by the end of the day.  Shorts were literally throwing in the towel.  Traders appeared entirely confused.

The action appeared to rhyme with moves in the currency markets.  The Euro rallied back from morning losses to go positive by mid-day.  Overnight, Greek sovereign debt fears once again roiled the markets.  The Greek bailout fears appear far overblown as the EU is likely to bailout Greece no matter what.   Weak jobs data also contributed to the morning losses in stocks, but we now have a tug-of-war between those who see weak jobs data as a sign of continuing Fed easiness and those who see the weak jobs data as a growth scare.

All in all, volume was fairly heavy today, but occurred primarily in the bullish afternoon trade.  Breadth was essentially even.  All things considered, not a bad day if you’re a bull.

From Daily Futures:

U.S. Economy
The U.S. Commerce Department said that durable goods orders were up 3.0% in January. Excluding transportation however, orders were down .6%, weaker than expected. The March 2011 eurodollars closed up .06 at 98.835.

The U.S. Labor Department said that jobless claims were up 22,000 last week to 496,000, more than expected.

The U.S. Treasury sold $32 billion of 7-year T-notes at a median yield of 3.05% with a bid-to-cover ratio of 2.98.

Grains and Cotton
The USDA said that, as of last week, 2009-2010 exports of:
Corn improved from up 4% to up 6% from a year ago.
Soybeans remained up 34% from a year ago.
Wheat improved from down 25% to down 23% from a year ago.
Cotton improved from down 29% to down 27% from a year ago.
May corn was down 3 cents at $3.832.

The International Grain Council increased its estimate of the world’s 2010-2011 wheat crop from 653 to 659 million tons. July wheat closed down 9.25 cents at $5.17.

Cotton prices continue to soar, supported by expectations for smaller supplies in 2010. There are also concerns that extremely wet conditions in the southeastern U.S. may delay planting this spring. May cotton closed up 2.01 cents at a new contract high of 81.17.

Livestock
April hogs jumped up 1.77 to 72.12, blamed on fund buying and strong packer demand for cash hogs.

The USDA said that net sales of beef totaled 8,000 tons last week, down from 9,800 tons the previous week. April cattle were down .17 at 91.75.

Orange juice
A freeze warning is in effect for parts of Florida tomorrow morning, but the ten-day forecast continues to show warmer weather ahead. May orange juice ended up .0055 at $1.4165.

Energies
The U.S. Department of Energy said that underground supplies of natural gas were down 172 billion cubic feet last week to 1.853 trillion cubic feet. Supplies are now down 3% from a year ago. April natural gas closed down 9.2 cents at $4.767.

Metals
May copper fell 4.35 cents to $3.21, pressured by today’s discouraging economic news.

April gold finished up $11.30 at $1,108.50 with ongoing support from expectations that the federal funds rate will stay low for a long time.

Currencies
The March euro finished up .0019 at 1.3544 after both Moody’s and Standard and Poor’s said that they may soon reduce Greece’s credit rating. Also, the European Commission estimated that real GDP will be up just .7% in 2010.

Germany’s Labor Office said that the unemployment rate increased from 8.6% to 8.7% in February.

Japan’s economy is not ideal, but the March yen closed up .0125 at 1.1219, the highest close in ten weeks, with help from investors looking for an alternative far away from the financial problems of Europe and the U.S.