Market Shrugs Off More Bad News

The market is showing its resilience again after a strong rally yesterday. Last night, several companies lowered guidance and talked about the difficult economic conditions. That had the market opening up much lower, but the S&P 500 has climbed back to even in the first hour, and the Nasdaq is actually higher by +1.0%.

The semiconductor group is the most surprising. Four companies lowered guidance last night, including Texas Instruments, Agilent, Broadcom, and Corning. It was a strong sign of how weak things are in the semi industry. But guess what? All 4 stocks are higher this morning, and the semi index is ramping +7.0%. That is a bear's nightmare (if you're short those stocks).

Ditto for steelmaker Nucor (NUE), which lowered its guidance materially and said that the current dropoff in steel demand is worse than it has ever seen, and that many customers continue to reduce their inventories due to liquidity concerns. The stock opened lower, but has reversed higher, and is now +2.6%.

In another sign of liquidity injections, the Bank of Canada cuts its benchmark rate by 75 basis points to 1.50%, larger than the 50 bps cut that was expected.

Separately, Ford (F) is in talks with China Changan to sell its Volvo brand.

Asian markets were mixed overnight; the dollar is slightly lower this morning, while oil is a bit higher to $44; the 10-year yield is up a touch to 2.75%; and the VIX is -3% lower to 56.85, its 3rd day below its 50-day average.

long QLD