Yesterday, stocks started off lower and ended lower. The initial disappointment that soured the market was the ADP employment report. U.S. private sector jobs dropped by 23,000 this month, where economists had expected to see payrolls increase by 50,000. Just two days ahead of the government’s non-farm payrolls report, this bad news prompted more sellers than buyers.
Then another unpleasant economic surprise hit mid-morning with the release of the Chicago PMI, which came in at 58.8, when the consensus had called for 61 versus 62.6 in February.
The only positive news of the day came at midday when the White House announced that offshore tracts would be released for oil and gas exploration. The energy sector saw a temporary bounce of 0.4%, and drillers Transocean (RIG) and Diamond Offshore Drilling (DO) both jumped by almost 4%. The drillers as a group rose 2.6%. However, President Obama’s announcement had little impact on the rest of the market.
The only other major group to close with gains was the financials. Regional banks were up 1.4% and multiline insurers rose 1.5%.
At the close, the Dow Jones Industrial Average (DJI) was at 10,857, off 51 points. The S&P 500 (SPX) fell 4 points to close at 1,169, and the Nasdaq (NASD) was off 13 points at 2,398.
The NYSE traded 1.2 billion shares and the Nasdaq crossed 711 million shares, both with decliners ahead of advancers by 8-to-5.
Crude oil (May contract) closed at $83.76 a barrel, up $1.39, and the Energy Select Sector SPDR (XLE) closed at $57.52, up $1.44.
June gold gained $8.80 to settle at $1,114.50 per ounce. The PHLX Gold/Silver Sector Index (XAU) closed at $165.28, up $3.87.
What the Markets Are Saying
The first quarter of 2010 ends today, and what a ride it has been, culminating as of yesterday with 17 sessions up this month and just five sessions down. Despite the fact that the March advance ranks as one of the most persistent, it hardly shows on the record books when the percentage higher per quarter or average move per day are considered. That’s because it has plodded along at an average rate of just under 20 points per day, on volume that would normally be considered too anemic to support new high prices.
Michael Ashbaugh of MarketWatch theorizes that the reason for the slow plod up was the crash in September 2008. This month we have been moving through an open space created in one week in that month when the DJIA fell from 11,140 to 10,262 — an 878-point blowout in a single week.
If that assessment is accurate, then the current advance will soon pick up sellers. From June 27, 2008, to Sept. 12, 2008, the Dow traded heavy volume from Dow 12,000 to 11,000, and last night we closed at Dow 10,856, just 144 points from a significant mass of possible overhead (sellers).
The reversal on March 25 was strengthened by yesterday’s decline, so we remain mildly bullish but very defensive.
Today’s Trading Landscape
Earnings to be reported before the opening include: CarMax, Movado Group, NGP Capital Resources, Scholastic Corp and Worthington.
Economic reports due: motor vehicle sales (the consensus expects 9 million), Monster Employment Index, Challenger job-cut report, jobless claims (the consensus expects 440,000), ISM manufacturing index (the consensus expects 56.3), construction spending (the consensus expects -1.1%), EIA natural gas report, Fed balance sheet and money supply.
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