The North American equity markets again rallied strongly, but this session
was different. Traders ignored rising Crude Oil prices ($WTIC +4.58/bbl to
126.77) and focused instead on a surprisingly strong employment report from ADP
as well as on the intervention moves by the Fed, the President and the SEC.
The July ADP numbers show a 9,000 job increase in private nonfarm employment
versus the anticipated 60,000 decline. Then the Fed extended the Primary Dealer
Credit Facility and President Bush signed the Housing & Economic Recovery
Bill. The SEC also extended its temporary restriction on naked short selling,
which has been supporting Fannie (FNM) and Freddie (FRE) since that plan was
announced.
The oil price increase of almost +$5.00/bbl was inspired by the much larger
than expected decline in EIA gasoline inventory for last week. But, these
estimates could be reversed next week, so traders reverted to the other crutches
and their confidence lifted markets to close near the highs of the day.
At the close, the DJIA (+186.13 +1.63% to 11583.69), S&P 500 (+21.06
+1.67% to 1284.26), and the NASDAQ Composite (+10.10 +0.44% to 2329.72) carried
on the rally a second day.
The Energy Sector (XLE +6.0%) was by far the strongest. Basic Materials (XLB
+2.4%) was next in line. Consumer Discretionary (XLY -0.1%) and Healthcare (XLV
very small loss) held the market rally in check.
The Oil Services ($OSX +6.1%) and Integrated Oils ($XOI +5.8%) were the
strongest industry groups, while Airlines industry ($XAL -4.9%) was the obvious
big loser.
In extreme Cara 100 trading, the natural resource players were strong,
including TCK (+13.7%), SU (+8.7%), RIO (+8.2%) and GGB (+7.9%). A huge loser
was Garmin (GRMN -21.9%), which failed to inspire with its quarterly report and
disappointing forward guidance. ERTS (-6.6%), BC (-6.0%) and TTM (-4.7%) were
also weak
The bond market was very quiet ($USB -0.05% to 114.83) and so too was the
forex market where $USD gained +0.05% to $0.7333 and the Euro dropped -0.08% to
1.5577. Earlier this morning the USD was at $0.73395 and the Euro at 1.5578,
almost unchanged.
Overnight, the markets in Asia-Pacific were moderately stronger, except
Shanghai again: Australia up +0.88% to 5052.6; Shanghai down -2.15% to 2775.72;
Hong Kong up +0.18% to 22731; India’s Sensex 30 up +0.48% to 14355.75; and
Japan’s Nikkei 225 up +0.07% to 13376.8.
In Europe at 7:51am ET (1251 GMT), the French CAC was up+0.66% to 4429; the
German DAX up +1.00% to 6524.5; and the UK FTSE up +0.53% to 5449.
Precious metals, which had been collapsing, rallied hard for a couple hours
after the 10:00am ET gasoline inventory report in the US. While during the day,
the gold futures dropped as low as 902.70, at the close $GOLD was down -14.10/oz
to 912.30.
Spot prices at about 7:53am ET are for gold, palladium, platinum and silver
per oz (vs the prices in the past three mornings): 910.80 (902.36, 925.31 and
930.05), 374 (377, 386 and 383), 1751 (1740, 1763 and 1752) and 17.53 (17.02,
17.41 and 17.42). The $USD is trading at $0.7340 (a bit weaker) and the Euro at
US$1.5576 (a bit stronger).
