Market Summary

Wall Street gave up early day gains on Wednesday following testimony from Fed chairman Ben Bernanke. The Man of the Year outlined the fed’s exit strategy for the massive monetary stimulus measures enacted during the financial collapse. Despite what the bond market wants to think, the central bank is in no rush to remove the measures, however at the same time believes that the financial system is stable enough to contemplate removing the measures.

As you can see, traders weren’t overly impressed as all three major averages declined on the day. The Dow Jones industrial average lost 20.26 points, or 0.20 percent, at 10,038.38. The Standard & Poor’s 500 Index declined 2.39 points, or 0.22 percent, at 1,068.13. The Nasdaq Composite Index fell 3.00 points, or 0.14 percent, at 2,147.87. We did see a large red to green swing, as the Dow was down nearly 100 points early in the session.

Energy is Back in Play

Crude prices rose after the EIA raised its demand and price forecast for 2010. U.S. crude futures settled up 77 cents at $74.52 a barrel. Black gold has gained 4.7 percent over its 3 day advance. The U.S. Energy Information Administration forecast world oil demand to rise 1.2 million barrels per day in 2010 from a year earlier, raising its forecast by 120,000 barrels a day from a previous one. The agency also forecast that oil prices would average $81 a barrel in the second half of the year, up 9 percent from current levels.

Trade Gap Widens in December

The Commerce Department showed a 10.4 percent jump in the trade gap, came as both U.S. exports and imports recorded large gains for the month. The trade report showed exports rose 3.3 percent in December to $142.7 billion, the biggest percentage increase since March 2007 and the eighth consecutive monthly gain. But that was outpaced by a 4.8 percent rise in imports to $182.9 billion.

For the year, the U.S. trade deficit totaled $380.7 billion, down 45.3 percent from 2008 in the biggest drop since 1991. It was also the smallest U.S. trade gap since 2002.

U.S. exports fell a record 15 percent to $1.55 trillion in 2009, while imports tumbled an even larger record 23.3 percent to $1.93 trillion.
The good news is that world trade is starting to pick up again following the peak of the economic collapse. However the continued deficit could put downward pressure on the greenback. I hate importing oil, sending our hard earned American dollars to OPEC, which in all likelihood uses that money to harm the U.S and its interests around the world.

Market Summary

The blue chips saw their 3rd consecutive gain on Wednesday, reacting to positive results from Intel and Goldman Sachs to give investors the confidence they needed after the summer lag. Traders hope better than expected earnings and forecasts are a de facto result of increased demand in a reviving economy. Traders found more good news when the Fed released minutes from its June meeting later Wednesday saying it now expects the economy to contract at a slower pace than previously thought.

The Dow jumped 256.72, or 3.1 percent, to 8,616.21, the biggest point gain for the blue chips since March 23. The Standard & Poor’s 500 index rose 26.84, or 3 percent, to 932.68, while the technology-heavy Nasdaq composite index gained 63.17, or 3.5 percent, to 1,862.90

The 10-year Treasury note, a widely used benchmark for mortgages and other loans, tumbled more than a point Wednesday, pushing its yield up 14 basis points to 3.61 percent as investor’s seeked more risky assets. In addition, the Labor Department’s Consumer Price Index rose 0.7 percent last month as gasoline prices surged. It was the fastest increase in 11 months, and 1 basis point higher than estimates. The reading sent bond prices down as the bond market is highly sensitive to signs of inflation, which erodes the value of a bond’s fixed returns over time.

Oil Moves Up

Benchmark crude for August delivery added $2.02 to settle at $61.54 a barrel on the NYMEX Wednesday after the weekly EIA Petroleum Status Report showed a greater than expected drop in inventory supplies; falling by 2.8 million barrels. However, the U.S. is still well ahead of last years marks. It’s total inventory of 344.5 million barrels is 16.5 percent above last year’s levels. Energy traders also got a boost from a falling dollar in the currency market.

Another Bailout?

CIT Group, a commercial lender is in talks with the fed to receive government money. First off, who is CIT Group? A knock off of Citi Group? They look he same if you close one eye and tilt your head to the side. How can their demise, after halting trading today, cause any sort of systematic collapse?

Well here is the answer… Representatives from the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. have been discussing plans for federal aid to prop up the commercial lender, whose failure could affect about a million small businesses that depend on it for credit.

Cant they get credit somewhere else? This is where the FDIC should have the power to swoop in and sell off the assets to other, more viable institutions.

Market Summary

After a terrible outlook in the premarket, stocks rebounded to start the week mixed. Wall Street was impressed by a better than expected reading out of the service sector. The ISM non manufacturing survey came in with a reading of 47, above estimates of 45.5. However, any reading below 50 indicates contraction within the economy.

The market looked to continue its downward trend as last Thursdays Employment Situation was still fresh on the mind of traders, many of whom were not involved in the pre holiday action. Global markets were sharply lower as well, creating a scenario where a steep decline on Wall Street was not out of the realm of possibility.

At the closing bell, the Dow Jones industrial average rose 44.13, or 0.5 %, to 8,324.87, and the broader Standard & Poor’s 500 index gained 2.30, or 0.3 %, to 898.72. The technology-heavy Nasdaq composite index fell 9.12, or 0.5 %, to 1,787.40. The Russell 2000 index of smaller companies declined 3.18, or 0.6 %, to 494.03.

Energy Prices Plunge

Crude oil fell to a five-week low on growing concern that the global economic recovery will falter, curbing fuel consumption. Energy shares got pummeled on plunging crude futures on the NYMEX. Light sweet crude for August delivery fell $2.68 to settle at $64.05 per barrel; black gold’s 4th straight drop, its longest session streak since February.

Energy prices have every much followed the implied assumption that the green shoots of recovery will bloom in the fall. As of late, traders have come back to reality and will have to realize that yes, the worst of the recession is over. However just because the historic period has passed doesn’t mean that double digit unemployment, (pretty historic in its own right) won’t cause a more normal recession categorized by high unemployment and lagging demand.

By that reckoning, we are still many months away from the end of a contraction within the economy.

Market Summary

Stocks rose in the pre market after upwardly revised growth projections, and stayed positive most of the day until the 2:15 conclusion of the June FOMC meeting led by Chairman Bernanke. The fed, in a very difficult position didn’t quite give the market the added jolt some traders were looking for; despite their language that the recession is easing. For the time being, the green shoots of recovery will be allowed to mature freely, with a steady as she goes attitude.

The Fed also didn’t say it would increase its purchases of treasuries or other kinds of government debt, disappointing some investors who had hoped for more. The Fed has said it would buy $1.25 trillion in mortgage-backed securities and $300 billion in Treasury securities in an effort to stimulate the economy by keeping borrowing rates low. However, many feel additional measures would cause inflation worries that would have an adverse effect in the bond market, sending borrowing costs higher.

Stocks started the day sharply higher after the Commerce Department reported that Durable Good Orders rose 1.8%, compared to expectations of a 0.9% decline. It was the 3rd gain in 4 months for the report. However, new home sales fell 0.6% in the month of May, disappointing the market like the existing home report the day before.

By the closing bell, the major indices finished mixed on the day. The Dow Jones industrial average fell 23.05, or 0.3%, to 8,299.86. The Standard & Poor’s 500 index rose 5.84, or 0.7 percent, to 900.94, and the Nasdaq composite index advanced 27.42, or 1.6%, to 1,792.34. The Russell 2000 index of smaller companies gained 5.18, or 1.1%, to 494.95.

Despite the lackluster results, nearly 2 stocks rose for every 1 that fell on the NYSE.
Bond prices fell on the fed announcement, with the yield on the 10 year rising 6 basis points to 3.69%. Prices had been higher after strong demand on a $37 billion government auction.

Energy Prices Drop on Inventory Gains

Sun setting on high energy prices?

Energy prices fell following an EIA report showing that stockpiles of gasoline increased for the 3rd consecutive week amidst higher prices. Crude for August delivery lost 57 cents to settle at $68.67 a barrel on the NYMEX. In addition, gasoline for July delivery fell 5.07 cents to settle at $1.8425 a gallon. Hopefully these prices will be reflected at the pump in the near future! Maybe not…