David Moenning Daily State of the Markets: 12/07
Tweet
Share
E-mail
Stumbling Home
Stocks headed higher right out of the gate yesterday on the back of the government�s report showing U.S. Productivity rose by the largest amount in two years. Perhaps more important though, was the data in the report on Unit Labor Costs, which fell by -1.0%. Labor costs are a very important component of inflation and therefore, are of great interest to the Fed. So with a report showing that the nation is more productive and yet not encountering any inflation in the workforce, the bulls put on their party hats.
Stocks opened more than 40 points higher and were up by almost 90 points before lunch. At this point, it felt like we might experience another year-end rally �melt up day� and things were looking pretty good for the bulls.
However, it was disconcerting to see that volume was not terribly strong during the advance, which may have had some influence on those looking to run program trades late in the day. And speaking of program trades, there were a couple of doozies run with about an hour left in the session. While no one is quite sure why it happened (isn�t that annoying?) stocks suddenly dropped like a rock at 3:00 pm eastern. The Dow fell about 40 points in fifteen minutes and went on to lose another 40 in the next half hour.
Normally this type of movement is associated with news. But just about the time everyone was scrambling to find out why stocks were diving and it looked like the market was going to give it all up and turn negative on the day, the selling stopped. And just like that, the indices stabilized and held on to small gains on the day. So despite the fact that stocks stumbled home into the close, the news outlets will get to talk about �another up day on Wall Street.�
Turning to this morning, there is no economic data to contend with until later this afternoon. However, with colder weather and a video from Al-Qaeda calling for attacks on oil installations in Islamic countries, oil is making news again this morning. Crude futures have moved back above $60 and are currently trading higher by $0.60 to $60.54. Stock traders will undoubtedly keep an eye on the crude contract today to see if oil will retreat or gain momentum. Obviously, any move higher from here will bring back worries about consumer spending, inflation, and the health of the economy.
Bond yields are up a little this morning, with the yield on the 10-yr currently trading at 4.51%. And finally, stock futures are hovering slightly below breakeven at the moment (Dow -5, S&P -0.70, and NASDAQ +0.50). So with oil threatening to spoil the year-end party, the question of the day is if the window dressing will be able to continue unabated.
Stocks "In Play" This Morning:
CSCO � Upgraded at JPM and reiterated �outperform� at Goldman
NYT � Downgraded at Prudential
BRCD � Upgraded to Buy at Adams Harkness
MSFT � Korean court orders separation of Instant Messaging from Windows and imposes find
PNRA � Reports comps +7.7% and raises f2005 earnings target
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: CSCO
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
Stocks headed higher right out of the gate yesterday on the back of the government�s report showing U.S. Productivity rose by the largest amount in two years. Perhaps more important though, was the data in the report on Unit Labor Costs, which fell by -1.0%. Labor costs are a very important component of inflation and therefore, are of great interest to the Fed. So with a report showing that the nation is more productive and yet not encountering any inflation in the workforce, the bulls put on their party hats.
Stocks opened more than 40 points higher and were up by almost 90 points before lunch. At this point, it felt like we might experience another year-end rally �melt up day� and things were looking pretty good for the bulls.
However, it was disconcerting to see that volume was not terribly strong during the advance, which may have had some influence on those looking to run program trades late in the day. And speaking of program trades, there were a couple of doozies run with about an hour left in the session. While no one is quite sure why it happened (isn�t that annoying?) stocks suddenly dropped like a rock at 3:00 pm eastern. The Dow fell about 40 points in fifteen minutes and went on to lose another 40 in the next half hour.
Normally this type of movement is associated with news. But just about the time everyone was scrambling to find out why stocks were diving and it looked like the market was going to give it all up and turn negative on the day, the selling stopped. And just like that, the indices stabilized and held on to small gains on the day. So despite the fact that stocks stumbled home into the close, the news outlets will get to talk about �another up day on Wall Street.�
Turning to this morning, there is no economic data to contend with until later this afternoon. However, with colder weather and a video from Al-Qaeda calling for attacks on oil installations in Islamic countries, oil is making news again this morning. Crude futures have moved back above $60 and are currently trading higher by $0.60 to $60.54. Stock traders will undoubtedly keep an eye on the crude contract today to see if oil will retreat or gain momentum. Obviously, any move higher from here will bring back worries about consumer spending, inflation, and the health of the economy.
Bond yields are up a little this morning, with the yield on the 10-yr currently trading at 4.51%. And finally, stock futures are hovering slightly below breakeven at the moment (Dow -5, S&P -0.70, and NASDAQ +0.50). So with oil threatening to spoil the year-end party, the question of the day is if the window dressing will be able to continue unabated.
Stocks "In Play" This Morning:
CSCO � Upgraded at JPM and reiterated �outperform� at Goldman
NYT � Downgraded at Prudential
BRCD � Upgraded to Buy at Adams Harkness
MSFT � Korean court orders separation of Instant Messaging from Windows and imposes find
PNRA � Reports comps +7.7% and raises f2005 earnings target
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: CSCO
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
You May Also Be Interested In
- Microsoft is planning to merge its consumer and enterprise Copilot chatbots in August - The Information
- After-Hours Stock Movers: NKE, BE, STZ, RIG
- After-Hours Stock Movers: AVAV, PRAX, VSH, CNXC, SHAZ
Create E-mail Alert Related Categories
Contributors, Special ReportsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
