And you thought Wednesday was slow.
One would’ve thought, by all the talk of LinkedIn’s (NYSE:LNKD) bubble-icious IPO debut and the outrage regarding nosebleed-high valuations being laid on still-private tech companies, that Thursday’s market action was fast and furious.
It was anything but — on one of the lowest-volume trading days of the year, stocks and commodities pretty much laid there, taking a rare day off from what has been a tug-of-war in stocks since an initial 2011 high was set in late February that capped a six-month, 30% rally.
The Dow Jones Industrial Average gained 45 points to 12,605, the Nasdaq rose 8 points to 2823, and the S&P 500 added 3 points to 1344.
Even the recently more volatile commodities sector was relatively ho-hum. Oil did slide nearly 2% to move back under $99 a barrel, but gold and silver only sold off by a fraction.
The bond market also confirmed the day’s malaise, with the 10-year Treasury note gaining one tick to barely budge its 3.17% yield.
With oil’s retreat back into double digits, the equities winners were mostly the usual suspects: airlines, hotels and restaurants. Investors awarded gold stars to the likes of US Airways (NYSE:LCC) ,up nearly 7%, Starwood Hotels (NYSE:HOT), which gained 2.9%, and Jack in the Box (NASDAQ:JACK), which climbed 5.7% despite a mixed-bag profit report.
For investors then, it’s doubtful that much could be gleaned from Thursday’s market action to justify much of a change of heart. The downtrend in most assets that has taken hold this month is very much intact, and as we noted on Thursday, the S&P 500 would really need to buck itself above its May 10 high to get equities back on track.
The problem is, there doesn’t appear to be much on the horizon that could give investors a reason to return en masse and bid stocks higher (although a Bank of Japan monetary decision on Friday could have some currency following that country’s dreadful economic data).
With low-volume days expected to come more frequently (interest figures to drop off a cliff next week as the Memorial Day holiday approaches), the worries of lower global demand and the subsequent effect on asset prices may continue to be the default setting (given the random whipsaw days, of course).
In a way, it’s that sort of fundamental concern by investors that bodes well for stocks in the long run (by as well as being an antidote to the charges that LinkedIn’s IPO brings back the rah-rah excesses of the late 1990s.
The difference back then, of course, is that 99.9% of traders wouldn’t have dreamt of suggesting valuations were out of whack. That some do now signals some sort of progress, no?
