Daily Insight

U.S. stocks pared fairly large early-session losses thanks to an afternoon rally that sent the S&P 500 higher by 1.5% from the day’s low. The broad market failed to make it back to the cut line and all 10 major industry groups decline on the session but I think we can call this one a moral victory – for perspective, the Dow was off by as much as 188 points at the day’s worst. Mid and small cap indices managed fractional gains.

Things got started on a bad note as futures were pointing lower due to concerns over growth prospects in Europe and the likelihood that sovereign debt woes would spread throughout the zone. Also putting the hurt on morning trading was the latest report on jobless claims, which showed the uptrend has extended to seven weeks now. Initial claims have just about returned to the 500K mark – peak levels of the last two economic contractions.

But around 1:00CST stocks staged a comeback, which was also right around the time Bloomberg News reported that the Obama Administration may ban all foreclosures until they have been screened and rejected by the government’s Home Affordability Mortgage Program, or HAMP. We discussed this proposal to halt foreclosures in Wednesday’s letter, so I won’t get into it again here.

Telecommunication and financial shares led the decline. Consumer-related and health-care shares were the relative winners, but still down for the session.
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Brent Vondera, Senior Analyst