Stocks bounced back on Wednesday as life returned to the prices of energy and other commodities, but one would have to forgive a skeptic for an unwillingness to budge from their point of view.
The main reason is volume, or as today would have it, the lack thereof. Trading seemed to be an afterthought for investors on Wednesday, and it’s useful to keep in mind that a two-day rally on May 9-10 — on extremely low volume — ended up doing nothing more than stalling an eventual selloff of more than 2.5% this month.
Naturally, index-fund investors will take it. The Dow Jones Industrial Average gained 81 points to 12,560, the Nasdaq added 32 points to 2815 and the S&P 500 rose 12 points to 1341.
Because of the earlier headfake, however, which did nothing but create a technical downtrend line from the 2011 highs set on April 29, it will likely take a move above 1358 or so on the S&P 500 (the high point before the recent 7-day correction) before investors significantly change their mood for the better.
Why Wednesday was the day for low volume and/or a melt-up in stock and commodity prices is anybody’s guess. The volatility in commodities (as well as the dollar) we’ve come to expect recently, as a bit of a reality check has sneaked back into asset prices.
Oil wound up rising 3.3% to above $100 for the first time since May 11, while gold gained 1.1% and silver jumped more than 5%.
Not surprisingly, the action in stocks was similar. May has brought a worldwide selloff and Wednesday could’ve been just one of those days where enough was enough. Gains were essentially uniform across the world on Wednesday. The U.S. market’s tug-of-war, which wound up bringing about a flat finish — on much higher trading volume — certainly suggests that oversold technical factors could have as much to do with it as anything.
Pity, then, the poor shareholders of airline stocks, which took a hit on crude’s rise, as well as investors holding office supply names, due to a glum profit report from Staples (NASDAQ:SPLS) which tumbled more than 15%, taking rivals OfficeMax (NYSE:OMX) and Office Depot (NYSE:ODP) along for the ride.
On Wednesday, the market was giving just about everything a pass — unless you made it to difficult to ignore.