Daily Market Reports | Feb 23 2010
By Greg Peel
The Dow fell 18 points or 0.2% while the S&P lost 0.1% to 1108 and the Nasdaq lost 0.1%.
It was a session of light volume and directionless trade on Wall Street last night as traders contemplated the events which lay ahead. Congress is in session this week and Wall Street's focus has swung south to Capitol Hill.
First up is the last ditch effort by President Obama to see some sort of health reform bill banged through Congress, but the Republicans are steeling for the final show-down. Trade in the large healthcare sector has come to a halt. Next will be the first moves to introduce some sort of financial market reform bill, and as such trading in the dominant banking sector is also becalmed on a sea of nervousness.
Then on Wednesday and Thursday, Fed chairman Ben Bernanke makes one of his regular testimonies to both houses of Congress. Wall Street will be particularly looking for more explanation behind the discount rate increase, and for more clues on the Fed exit strategy and potential cash rate rise ahead. Markets were confused last week when the discount rate increase was immediately followed by the first deflationary CPI monthly reading since 1982.
And on a more macro scale, Wall Street is still keeping half an eye on Europe, where the news flow has ground to a halt. In a couple of weeks Greece will present its deficit reduction plan to the EU, but until that happens, and barring any fresh explosions on the Continent, global markets will remain wary.
In the meantime it appears the “Greek correction” which began in January is over, with stock markets having retraced half their losses from the peak. But there is little impetus to surge ahead while problems remain unresolved.
On the US data front there was mixed news last night, with the Dallas Fed activity index dipping into contraction at minus 0.1 from plus 8.3 last month and the Chicago Fed activity index regaining the positive at plus 0.02 to mark the second positive read in three months. For all of the two-year recessionary period, the Chicago index was in the negative.
These are both zero-neutral indices, but the difference is that the Dallas index measures for the state of Texas while the Chicago index is a national activity measure.
The US dollar index ticked down slightly to 80.51 by the end of the session and commodity markets generally lost their recent verve as calm descended. Base metals were mostly off 1-2% with zinc down 4% while gold slipped US$2.70 to US$1114.40/oz.
Oil was an exception, as the expiry of the March delivery contract conspired with building strike activity at French refineries to close crude up US35c to US$80.16/bbl.
The energy sector of the stock market was also in focus last night following the earlier announcement that oil services leader Schlumberger had agreed to take over rival Smith International. Shares in Schlumberger actually took a hit on the news, given the money being spent, and that sent the energy index lower. But Wall Street is now interested in what further consolidation there may be in the oil services space, and Australia is in on that act as well.
The Aussie was little moved at US$0.9008 and the SPI Overnight dropped 2 points.
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