Today’s Markets
- In Asia, Japan +0.3% to 9574. Hong Kong -0.7% to 22344. China -0.9% to 2705. India -1.0% to 18132.
- In Europe, at midday, London -0.2%. Paris -0.4%. Frankfurt -0.4%.
- Futures at 7:00: Dow -0.5%. S&P -0.5%. Nasdaq -0.5%. Crude -0.6% to $98.78. Gold -0.3% to $1520.10
Wednesday’s Economic Calendar
- 7:00 MBA Mortgage Applications
8:30 Consumer Price Index
8:30 Empire State Mfg Survey
8:30 Real Earnings
8:30 FDIC Conference: Minority Depository Institutions
9:00 International Capital Flow
9:15 Industrial Production
9:30 Senate Hearing: Dodd-Frank Implementation
10:00 NAHB Housing Market Index
10:00 Senate Hearing: Banking Supervision
10:30 EIA Petroleum Inventories
The S&P 500 finally gave us that long-overdue oversold rally with a 1.26% gain — the best one-day performance since April 20. The index is now up 2.40% year-to-date but down 5.55% from the interim high of April 29. From a longer perspective, the index is 90.4% above the March 2009 closing low and 17.7% below the nominal all-time high of October 2007. Below are two charts of the index — with and without the 50 and 200-day moving averages.
The S&P 500 managed to close up 1.26% on the day, which was its first 1%+ up day since May 31st. Since the bull market began on March 9th, 2009, the S&P 500 has now closed higher by 1% or more 101 times. Interestingly, 1%+ days are becoming less common as the bull market ages…
…the number of days has been trending higher as time has passed, and five of the six longest periods without a 1% up day have come in 2011. The longest stretch during the bull market without a 1%+ gain was 41 days between April 20th and May 31st…
…At least over the last year, the market has struggled somewhat on the day after 1%+ up days. As shown below, the S&P 500 has averaged a decline of 0.12% (median -0.07%) on the day after 1%+ days since last June with positive returns just 41.4% of the time.
Federal Reserve officials are discussing whether to adopt an explicit target for inflation, a strategy long advocated by Chairman Ben S. Bernanke and practiced by central banks from New Zealand to Canada, according to people familiar with the discussions.
The talks coincide with Fed efforts to spur growth and reduce unemployment without fueling higher prices. An inflation target could help quiet critics of record monetary stimulus and anchor public expectations for consumer prices should the Fed in coming months try to spur the recovery by keeping interest rates close to zero for longer.
Greek economic prospects darkened as European bickering risked delaying the next rescue payment and defections weakened Prime Minister George Papandreou’s majority.
An emergency session of euro finance chiefs in Brussels yesterday failed to break a deadlock on how to enroll investors in a second bailout without triggering a default, casting doubt on funds due from the International Monetary Fund next month.
On Tuesday, euro zone finance ministers failed to reach agreement on how private holders of Greek debt should share the cost of a new bailout for Athens worth an estimated 120 billion euros before a June 23-24 summit.
The European Central Bank opposes such a move, saying that if such participation is involuntary it could be deemed default that could shock markets and put weaker euro states at risk.
The lack of agreement pushed the cost of insuring Greek debt against default to a new record high on Wednesday, while shares in Greek banks fell 7 percent on fears of political uncertainty.
The PASOK deputy who defected said he could not back the package. “You have to be as cruel as a tiger to vote for these measures. I am not,” George Lianis said in a letter to Parliament Speaker Filippos Petsalnikos on Tuesday.
Another PASOK member said he would vote against it. But analysts said the party, which still holds a majority, would pass the package by the end of the month before working on another set of laws on how to implement it.
“My gut feeling is that at the end of the day they will get enough MPs… I’d say there is a 70 percent chance that it will go through,” said Diego Iscaro, IHS Global Insight.
Bonus: Conan Commencement