Reply #58: This is how the story ends. [View All]

[ozymandius]

Dow 12,080.73 Down 5.77 (0.05%)
Nasdaq 2,366.71 Up 2.94 (0.12%)
S&P 500 1,377.94 Up 0.01 (0.00%)
10-Yr Bond 4.606% Down 0.067
NYSE Volume 2,693,922,000
Nasdaq Volume 1,981,191,000

Good to see the blather machine is fixed.

4:20 pm : After consolidating one of the best month's of market gains in almost a year, the underlying bullish tone responsible for lifting stocks since mid-July returned late in the day. To wit, the Dow, S&P 500 and Nasdaq rose 3.4%, 3.1% and 4.8%, respectively, in October. Tuesday's overall action, though, showed signs of fatigue on the part of buyers who, with two-thirds of the S&P 500 having already reported quarterly results, are beginning to shift their focus to economic data.

While Friday's employment report remains the biggest potential market mover this week, today's batch of soft economic data fueling some uncertainty about the pace of economic growth was eventually too much to overcome.

Just after the market opened, investors already dealing with an unexpected decline in October Consumer Confidence received the latest update on the health of regional manufacturing activity. Unfortunately for the bulls and to the delight of those questioning whether the Fed can in fact engineer a successful soft landing, the Chicago PMI fell to its lowest level (54.1%) in October since August 2005. After climbing to its strongest level in more than a year a month earlier, the disappointment took some steam out of early buying efforts.

Bonds, though, took notice and accordingly pushed yields across the curve to session lows. However, not even the yield on the 10-year note slipping to its lowest level (4.60%) in more than three weeks was enough to lend support to the rate-sensitive Financials sector. In fact, the absence of influential sector leadership posed the biggest problem for the bulls.

Technology provided some support again, but with October historically providing opportunities for bargain hunters to pick up beaten-down tech stocks, the sector's continued upward momentum wasn't all that surprising.

What was unforeseen was a more than 2.5% swing in the price of oil that closed the commodity slightly higher on the day and back above $58/bbl. While short covering in oil renewed some leadership in Energy, the turnaround in crude took an added toll on the likes of retail and transportation stocks already reeling from concerns about the economy slowing too much.

Not even defensive-oriented consumer staples stocks caught a break despite a better than expected Q1 report from Procter & Gamble (PG 63.38 -0.43). While beating expectations for the 14th straight quarter, guidance that was basically in line with forecasts left investors wanting more, especially after the Dow component hit a new 52-week high heading into its report. DJ30 -5.77 NASDAQ +2.94 SP500 +0.01 NASDAQ Dec/Adv/Vol 1593/1463/1.96 bln NYSE Dec/Adv/Vol 1634/1633/1.58 bln