Daily Insight: mortgage apps, consumer credit and Fed speeches

U.S. stocks stumbled a bit Wednesday after Fed Chairman Bernanke touched on a number of challenges the economy will have to deal with and a large decline in consumer credit raised concerns about the pace of future consumption. All in all though, especially since the Greece story remained in the headlines, stocks held in there pretty well.

All 10 major industry groups lost ground on the session, with telecom shares leading the decline by a large margin – the index that tracks these shares lost 2.34%, which was well-worse than the 0.59% broad-market decline. Energy and utility shares rounded out the three worst-performing sectors.

The relative winners were tech and health-care, down 0.21% and 0.42%, respectively.

The major indices were able to withstand the rather negative comments from Bernanke, his speech occurred around lunch and an hour later the broad market was hovering just below where we opened. It was the consumer credit report that had the larger effect on sentiment, as the relative slide occurred directly after that release.
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Brent Vondera, Senior Analyst

Daily Insight: Interest rates and FOMC minutes

U.S. stock indices ended mixed on Tuesday as the S&P 500 and NASDAQ Composite gained some ground, while the Dow closed slightly lower; we’ll just have to wait for the third return to 11K in 10 years.

The broad market hovered around the cut line for most of the session as European government-debt concerns returned to hold sentiment back, but stocks caught a slight bid immediately following release of the FOMC minutes. (The FOMC is the Federal Reserve’s rate-setting committee and the minutes are the notes from their most recent meeting.)

The Fed talked about how they believe a lingering high jobless rate will curb the recovery and also trimmed their GDP estimates along with their inflation expectations. Traders heard that and read: ultra easy money will continue.

Stocks would have probably recorded a more substantial rise if not for renewed debt concerns in Europe – we’ve talked about how this issue isn’t going away. Right now the Greek government doesn’t like the fact that the IMF is involved, which means they’ll really (as opposed to just the old nod to EU officials) have to rein in spending. As a result, no one is totally sure there is a financial-aid package for Greece in place. Of course Germany and France, the two strongest economies within the Eurozone, will ultimately backstop Greece’s financial needs, but the issue is a bit more precarious than it was at least perceived to be just a week ago.

Financial, utility and basic material shares were among the six of the 10 major sectors that closed higher on the session. Telecom shares led the three sectors that fell; industrials ended the session flat.

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Brent Vondera, Senior Analyst

Daily Insight: ISM Service and Pending Home Sales

U.S. stocks gained ground for a second-straight session as better-than-expected economic data juiced investor sentiment. However, while the broad market held just about all of its early-session gains, the Dow retreated a bit from the session high and the 11K mark remained elusive for at least another day.

Energy shares led the broad-market’s advance as the price of crude jumped well into the $86/barrel handle – here we go again. Basic material stocks were the next-best performing group as the commodity play rolled. Consumer discretionary shares rounded out the top performers – this one really has me confounded; how can the market completely ignore the headwinds higher energy prices have on an already burdened consumer.

We’ll see how stocks react to possibly rising interest rates, at least over the near term. Treasury yields advanced yesterday, moving closer to that 4.00% level on the 10-year – a closely watched level. I’m not sure a continued sell off on the long-end of the curve (prices go down yields go up) will act as a wall, halting the run in stocks, but with roughly $80 billion in government debt issuance this week things may just get interesting on the interest-rate front.

http://www.acrinv.com/20100406255/blog/daily-insight-ism-service-and-pending-home-sales

Brent Vondera, Senior Analyst

Daily Insight: March jobs report

Nonfarm payrolls rose 162,000 in March.

Private-sector payrolls increased 123,000.

The unemployment rate held steady at 9.7%.

Specifics on the payroll report are after the jump.

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Brent Vondera, Senior Analyst