Daily Market Reports | Jul 10 2009
By Greg Peel
The Dow closed up 4 points last night to barely trouble the scorer, but the S&P and Nasdaq both gained 0.3%. At 882, the S&P is still looking uncomfortable nevertheless.
After a week of sudden portfolio realignment back into defensive sectors at the expense of risk sectors, Wall Street reversed its stance last night. However, on feather-light volume one must suggest one swallow does not a summer make. More realistically, Wall Street took the opportunity to square up positions after the mild correction and move to the sidelines ahead of more earnings reports. A choppy session provided little in the way of a trend indication.
The positive Alcoa result, as released after the bell following the previous night’s session, arrested the creeping nervous Wall Street has experienced over the last few days. One gets the impression a below-estimate result from Alcoa might have sent the market into a serious slide. An above-estimate result has simply provided cause for reflection. More results will now trickle in until the real flood hits in another week or so, and a jittery market cannot afford too many “misses”. Results on or above the money are likely to foster ongoing stability rather than further runaway exuberance.
Wall Street was also heartened by yesterday’s release of China’s monthly auto sales numbers. Sales jumped 36.5% in June to mark the sharpest monthly rise in 2009 to date, to derive a 17.7% growth average over twelve months. The debate rages around the globe as to whether China’s astonishing 2009 commodity purchases reflect true stimulus demand or just a lot of smoke and mirrors. The car sales number – if accurate – implies you don’t really need to throw someone in gaol to make a point.
On the flipside, many major US retail sales outlets of the discretionary variety reported monthly same store sales last night, and wish they didn’t have to. The results were best described as dismal. But a downturn in frock demand is not the stuff of confusion on Wall Street at present. What’s really going on in the rest of the world is, leading to what is still basically a sideways drift in the stock market.
The US dollar spun around and crossed back over the 80 mark in the index for the umpteenth time last night, settling down a percent to 79.86. This provided respite in commodity markets, allowing oil to post its first up-day in seven, albeit a mere US27c to US$60.41/bbl. Among the base metals, aluminium added 2% with Chinese cars in mind and copper took back 3% after some sharp falls. Tin was down another 3% however.
Gold steadied with a US$2.90 rise to US$912.20/oz, and the ever volatile Aussie took back half a cent to US$0.7830.
Last night also saw the release of the May wholesale inventories data in the US. Last month the April data showed a fall of 1.4%, and economists were expecting another fall of 1.0% for May. The result came in as a fall of 0.8%, which keeps the “less bad” mantra alive, but then the April figure was revised from down 1.4% to unchanged.
When it comes to the important factor of inventory movements, 1.4% is a big fall. To revise three month old data to unchanged is quite simply ridiculous. On another day perhaps this would have been inspiring news, but a breakdown of the numbers suggests only non-durable (ie consumable) goods inventories are growing against continuing falls in durable goods inventories, which have a greater economic trend significance. But then you might as well just spin a chocolate wheel, it would seem.
The SPI Overnight rose 13 points or 0.3%.
