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Stock Market Closing Report - May 7, 2012

 May 07, 2012 04:36 PM

(By Michael Vodicka) Stocks posted a massive intraday rally today, rebounding from sharp overnight losses as the bulls viewed the most recent dip as another chance to buy. For the day, the Dow Jones fell .23%%, the S&P500 gained .04% while the NASDAQ led after tacking on .05%.

The overnight session was dominated by news out of Europe, where key elections in both France and Greece and the prospect of new political regimes spooked investor confidence. That had both the S&P and Dow futures trading deeply in the red, another reminder of how important the Euro zone remains to the strength of the global economy and investor confidence.

But once the market had some time to digest the news and the regular session kicked off, the tone began to perk up a little but as the bulls began to collect themselves. That had the S&P futures trading up an astonishing 24 points from its overnight low and the Dow futures up an equally impressive 213 points off its overnight low.

[Related -Will Last Week’s Relief Rally In Emerging Markets Last?]

Those gains didn't come on any specific news or developments, it was really just a matter of the market taking some time to absorb some new information and then deciding that maybe it wasn't as bad as first thought.

Strong Dollar, Weak Commodities

But in spite of the sharp equity rally, commodities still looked generally weak, with gold falling .42% and crude giving up .44%. That definitely had something to do with the Dollar, posting a sizable intraday gain as the Euro plummeted on the election news. Bigger picture, the Fed and most central banks across the world have made it clear that they are committed to supporting the global economy, so on a longer-term basis the trend of general currency devaluation is well in play.

What Next?

[Related -How Much Longer Can Our Unaffordable Housing Prices Last?]

Looking forward, we actually have a fairly slow week of economic data on tap, with only a few major releases set to hit the wire later in the week.

  • Thursday-Jobless Claims & Import/Export Prices
  • Friday-Consumer Sentiment

That means the market will largely be trading on sentiment and technicals. On that note, the averages remain in very key territory. The Dow in particular continues to fight an epic battle in the 13,000 range, which it has crossed numerous times since early March with no real definitive break in either direction.

(click to enlarge)

So as it stands the market continues to trade remarkably strong considering the long list of problems it's confronting. Like weakness in the Euro zone and slower growth in China. There are also plenty of worries on the domestic front, where the U.S. is battling its own fiscal demons with too much debt and consumers confront the reality of high unemployment, stagnant wage growth and restricted access to credit. But for the time being, the averages are hanging touch, trading near the recent multi-year highs as investors choose to focus on the good news and probability that the central banks will be there to stimulate on any material weakness in the global economy or stock market.

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