Daily Market Reports | Mar 07 2009
By Greg Peel
The Dow closed up 32 points or 0.5% while the S&P gained 0.1% and the Nasdaq lost 0.4%.
It has been the worst week Wall Street has seen this year. The Dow closed last week just above 7000 but last night traded under 6500 before a late Friday square-up rally provided a 6626 close and a fall of 6.2% for the week. But the DJIA is now of spurious relevance (if ever it was previously anyway). The S&P 500 finished last week at 735 and closed last night at 683 for a 7% weekly decline. The S&P broke important support at 700 during the week, while the Nasdaq became the last of the three indices to breach November lows.
Last night saw the release of the monthly US employment figures. For Wall Street it was a bit like anticipating that a car crash was about to happen, wanting to look away but not being able to avert one’s eyes. The job loss number came in at 651,000 and the unemployment rate at 8.1% – the worst since 1983. This figure was worse than economists expected, although a lot of traders had talked themselves into a number even more dire. But let’s face it. Was anyone shocked?
Attention again focused on the usual suspect names last night – General Electric, General Motors, Citigroup – mostly because they’ve lost 20-30% this week. They are now penny-dreadful stocks, so it’s rather irrelevant in index terms. The stocks are, nevertheless, emblematic of all that the GFC has wrought, as the former looks to losing its credit rating and the latter two look to effective bankruptcy (with government support).
The rally back from a low of down 125 in the Dow all occurred in the last half hour and is not indicative of any bottom being found. It was simply a square-up-your-shorts-and-go-home rally, with weary Wall Street traders keen to forget all about it over the weekend.
Clearly everyone is sick of the selling, and the worst week of 2009 passed with little fanfare. There is little at present to suggest a bottom is nigh, other than one feels that selling fatigue is beginning to build to a point where a proper rally might soon be on the cards. A bear market rally anyway. It is notable that while we are now plumbing new GFC depths, the VIX volatility index is struggling to maintain a level over 50. There is just not the same rush for more downside protection as there was last year when the VIX hit 90.
The US dollar finished the week on a down note, sending commodity prices higher. Oil gained US$2.03 to US$45.64/bbl, copper and tin added 2% and lead 3%. Gold had a quiet session, rising US$1.80 to US$937.90/oz. The Aussie was slightly better at US$0.6404.
The SPI Overnight gained 5 points.
Many thanks to all our friends at Sky Business for a lovely night out. I’m going back to bed.
