Wednesday, April 01, 2009

Market Rebounds From Early Lows After Weak Employment Data

The market took a big dip right after the open, on the heels of a weak ADP employment report as well as a continuation of the selling pressure that showed up in the last hour of trading yesterday.

The ADP employment report showed 742,000 jobs were lost in March. That is a big number, and bodes poorly for Friday's official jobs report. Historically, employment always bottoms after the economy, but in the interim these rising unemployment figures don't help consumer confidence, lending, etc.

In other economic news, the ISM Manufacturing Index came in at 36.3, higher than last month's 35.8. Pending new home sales for February rose +2.1%. Stability in the housing market would go a long way to adding to stability in the market and broader economy.

The bank stocks are leading the action so far. FDIC Chairman Bair said that she is cautiously optimistic the US banking industry is getting on better footing. And several smaller regional banks today paid back their TARP funds to the govt., and those stocks are trading higher. We are still waiting to see who will be the first big bank to pay back the TARP, and get the govt. out of their hair.

Asian markets were mostly higher overnight; the dollar is slightly higher this morning; oil is lower, near $48, while gold is trading higher near $925; the 10-year yield is lower again to 2.67%; and the VIX is -2.5% lower to 43.03, but still above its 200-day.

Trading comment: I didn't make any trades yesterday, as the late day weakness was a bit disconcerting to me. But this morning's action is very positive, as long as the SPX can remain above its 50-day near 790. I am still looking for another push higher in the market before earnings season starts up.

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