Daily Insight: NFIB and What's a Keynesian Central Banker to Do?

U.S. stocks bounced between gain and loss on several occasions yet again yesterday, but eventually rallied to end a two-day slide that had sent the S&P 500 to a seven-month low.

Comments from Fed Chairman Bernanke reportedly put the brakes on an early-morning rally with his comments on the labor market. The Fed head stated that the unemployment rate is likely to remain “high for a while.” But you can’t keep a good market down, most stocks pulled a reverse of what’s played out over the past couple of sessions and rallied late in the day to close at the session high.

In Monday’s letter, following Friday’s loss that brought the S&P 500 back down to the 1060 handle, we mentioned that it wouldn’t be long before a retest of 1040 occurs – that is the intraday low hit on May 25 and the lowest closing level since last November. We came close to that mark yesterday morning, hitting 1042, and rallied from there; although not in a straight line.

Basic material shares enjoyed a really nice day, jumping 2.49%. These shares, which were among the top-performers when the market was in rally mode, had been hit hard, falling 18% since April 26. Technology shares were the laggards, but all 10 major industry groups did rise for the session.

I did notice commentary suggesting that the market rebounded on speculation the Swiss National Bank (SNB) has intervened to support the euro. Speculation? They have been intervening for a while, as we’ve been discussing. The Swiss Franc has plunged 9.5% over the past six weeks due to the SNB selling the heck out of it to support the euro – yeah, euro would probably be down to that 1.15 USD/EUR level (the all out intervention level) without the SNB’s actions.
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Brent Vondera, Senior Analyst
http://www.acrinv.com/