Market Wrap

The markets did in fact bounce back, although it wasn't much of a bounce. But I guess its still better than another day of plunging markets.

I think what reassured investors early on was that China's markets bounced back from their drubbing, and that 10-year yields rose, indicating confidence in our markets and the U.S. economy. The 10-year finished higher at 4.55%.

You also had Bernanke speaking this morning. And since taking office, the markets have often risen on days that Gentle Ben has testified. Today, he reassured investors, saying "there didn't seem to be any single trigger'' for Tuesday's sell-off. I wouldn't expect him to say anything else, but it comforted investors nonetheless.

The volatility indexes fell today, after yesterdays record spike in the fear gauges. But the put/call ratios remained elevated, with the CBOE put/call running above 1.0 all day.

By market cap, big caps handily outperformed small caps, indicating a flight to quality pattern, as investors gravitate towards safer stocks first. The SPX rose 0.56% today, while the RUT was up only +0.08%.

In ETF land, the financial sector led the way, rising +1.8% on the day. Utilities and materials rose +0.7%, while consumer discretionary and tech lagged, rising +0.2%.

Oil also rose on the day, closing near $61.75. If China were truly collapsing, you would expect oil to fall as markets anticipate lower demand from that region. But such has not been the case for the last 2 days.