Ticonderoga Securities Afternoon Market Strategy Reflections
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Ticonderoga Securities Strategy and Economics / Afternoon Radar Screen by John Stoltzfus
Stocks fluctuated throughout the day but ended the day clearly to the downside, as better than expected economic data from within the existing home sales number and the Conference Board’s index of leading economic indicators wasn’t enough to offset concerns about economic growth, housing prices, job losses and sovereign debt risk in Europe.
Today’s action appears to us not indicative of much more than confirmation that we remain in a workout market environment with action that often reads “three steps forward, two steps backward and vice versa” more the norm than the exception.
We would expect that as the election grows closer and as ideas move from rhetoric to outlines to concrete proposals to address the jobs crisis and the overall slowing in the economic recovery, opportunities for rallying points of greater length will develop. Until then, the workout market remains ensconced in the landscape. Gather ye rose buds while ye may.
Afternoon Markets
Stocks stateside moved modestly lower on the day after paring steeper declines from earlier that occurred after the initial jobless claims numbers disappointed by 15,000 more than expected. The market got a data point “bailout,” as existing home sales numbers picked up, albeit at the second lowest annualized pace on record and the Conference Board’s index of leading economic indicators rose 0.3%, three times the gain expected by economists surveyed ahead of the report today.
Market participants appeared to conclude that the mixed data was, if not “good enough for rock n’ roll,” good enough to indicate that economic growth passed muster to meet the Fed’s forecast for a “modest” rate of recovery.
As the day moved into late afternoon, only technology among the 10 GICs or economic sectors was trading positive, and that more flat with a positive bias than much higher. Best relative performers for the day among the sectors were tech, consumer discretionary and telecom. The worst three were utilities, industrials, and financials, with losses ranging from just over 1.0% to over 2.0% as the day's session came to a close.
Small and mid cap stocks underperformed large caps.
Stocks in Europe closed lower for a third day in a row, with the Stoxx 600 closing near flat with a negative bias. Losses among the major European bourses today ranged from 0.09% on the U.K. FTSE 100 to as much as 1.02% on Sweden’s OMX Stockholm 30 Index. The markets came under pressure as peripheral debt spreads widened and bank stocks weakened on growth risk tied to sovereign debt, earnings and economic growth. A purchasing managers’ index that showed European services and manufacturing growth slowed more than expected in September added further drag on the markets today.
Bonds
U.S. Treasury prices slipped and the 10-year treasury yield firmed after economic data eased concerns earlier that the Fed would need to increase debt purchases. The yield on the 10-year Treasury note slipped 1 bp to 2.55%. The 2-year yield was near unchanged at 0.42%.
Commodities
Gold prices firmed around record levels even as the dollar strengthened and the euro fell. Copper and oil prices edged higher on a lessening of growth concerns among commodities traders.
Stocks fluctuated throughout the day but ended the day clearly to the downside, as better than expected economic data from within the existing home sales number and the Conference Board’s index of leading economic indicators wasn’t enough to offset concerns about economic growth, housing prices, job losses and sovereign debt risk in Europe.
Today’s action appears to us not indicative of much more than confirmation that we remain in a workout market environment with action that often reads “three steps forward, two steps backward and vice versa” more the norm than the exception.
We would expect that as the election grows closer and as ideas move from rhetoric to outlines to concrete proposals to address the jobs crisis and the overall slowing in the economic recovery, opportunities for rallying points of greater length will develop. Until then, the workout market remains ensconced in the landscape. Gather ye rose buds while ye may.
Afternoon Markets
Stocks stateside moved modestly lower on the day after paring steeper declines from earlier that occurred after the initial jobless claims numbers disappointed by 15,000 more than expected. The market got a data point “bailout,” as existing home sales numbers picked up, albeit at the second lowest annualized pace on record and the Conference Board’s index of leading economic indicators rose 0.3%, three times the gain expected by economists surveyed ahead of the report today.
Market participants appeared to conclude that the mixed data was, if not “good enough for rock n’ roll,” good enough to indicate that economic growth passed muster to meet the Fed’s forecast for a “modest” rate of recovery.
As the day moved into late afternoon, only technology among the 10 GICs or economic sectors was trading positive, and that more flat with a positive bias than much higher. Best relative performers for the day among the sectors were tech, consumer discretionary and telecom. The worst three were utilities, industrials, and financials, with losses ranging from just over 1.0% to over 2.0% as the day's session came to a close.
Small and mid cap stocks underperformed large caps.
Stocks in Europe closed lower for a third day in a row, with the Stoxx 600 closing near flat with a negative bias. Losses among the major European bourses today ranged from 0.09% on the U.K. FTSE 100 to as much as 1.02% on Sweden’s OMX Stockholm 30 Index. The markets came under pressure as peripheral debt spreads widened and bank stocks weakened on growth risk tied to sovereign debt, earnings and economic growth. A purchasing managers’ index that showed European services and manufacturing growth slowed more than expected in September added further drag on the markets today.
Bonds
U.S. Treasury prices slipped and the 10-year treasury yield firmed after economic data eased concerns earlier that the Fed would need to increase debt purchases. The yield on the 10-year Treasury note slipped 1 bp to 2.55%. The 2-year yield was near unchanged at 0.42%.
Commodities
Gold prices firmed around record levels even as the dollar strengthened and the euro fell. Copper and oil prices edged higher on a lessening of growth concerns among commodities traders.
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