Soft Housing Data Dampens Markets

[Excerpted from Bill Cara's Daily Report]

US Commerce Department data on the housing market, predicted to bounce, but was disappointingly soft, pushed equities broadly lower, the market closing at session lows.

At the close, the DJIA (8,474.85 -29.23 -0.34%), S&P 500 (908.13 -1.58 -0.17%) and NASDAQ Composite (1,734.54 +2.18 +0.13%) were soft.

The Toronto Composite and Toronto Venture Board were up strongly on a catch-up post-holiday Tuesday.

After gapping up massively on Monday and then trading lower through the session on huge increases in volume, the companies from India suffered more profit-taking on Tuesday: HDFC Bank ([HDB]] -4.1%); InfoSys (INFY -5.4%), and Cognizant Technology (CTSH -2.8%). Volume in the shares of American companies continues to be anemic despite calls from pundits like Biryini, Hartman and others that the market is now in a Bull.

In NY, the sector loser was Financial (XLF -2.0%), with Banks ($BKX -3.4%) pulling the sector down, largely on concerns of government legislation regarding their credit card business. Utilities (XLU +1.8%) and Basic Materials (XLB +1.2%) were the leaders.

The Cara 100 company stocks that lifted the most were: Myriad Genetics (MYGN +4.2%), on renewed takeover speculation, Nokia Siemens (NOK +4.0%) after cutting some jobs and floating discussion the company is seeking some of Nortel’s assets, and optionsXpress (OXPS) and Silver Wheaton (SLW), both up +3.8%.

Bank of America (BAC) sold 825 million common shares at $10, a discount of -11.1% of the prior day close, but down some 35-40% of the prices a few days earlier when this trade was lined up when 2 billion shares traded in a three day span, leading us to believe there was pump and dump to raise the funds for this near-$10 billion transaction. This concern about market integrity is precisely why the SEC and not the Fed should be exclusive regulator over Humungous Bank & Broker ((HB&B)).

Earlier Wednesday, prices were mixed across the markets in Asia Pacific and Europe. Japan’s Nikkei 225 (9,344.6 +0.59%) and the Aussie All Ordinaries (3,808.9 +0.22%) lifted, but the Hong Kong Hang Seng (17,475.8 -0.39%), Shanghai Composite (2,651.4 -0.94%) and India’s BSE 30 (14,060.7 -1.69%) all closed lower. Later in the day, in European equity bourses, the French CAC (3,279.5 7:42AM ET +0.14%), German DAX (4,977.5 7:27AM ET +0.36%) and UK FTSE 100 (4,457.0 7:27AM ET -0.56%) were mixed.

Like Friday and Monday, the US long Bond ($USB 121.69 -0.09 -0.08%) closed down. The 30-year (4.207 +0.31 +0.74%), 10-year (3.243 +0.32 +1.00%), and 5-year (2.102 +0.23 +1.11%) all lifted. Treasury bill yields (0.175 +0.15 +9.37%) also lifted.

The $USD (81.98 -0.62 -0.75%) closed lower again, while the Yen (104.18 +0.33 +0.32%) reversed part of the previous day’s loss. The Euro (136.25 +0.63 +0.46%), Pound (154.75 +1.27 +0.83%), and Cdn Loonie (86.51 +0.54 +0.63%) were all stronger against the USD once again. As opined, losses in the $USD are needed to hold US equity prices at these levels or push them higher.

Crude Oil ($WTIC 60.10 +0.51 +0.86%) continued Monday’s move higher as the $USD dropped.

$GOLD futures, consistent with the falling $USD, lifted $7.40/oz (925.70 +7.40 +0.81%) and is, like oil, stronger this morning.

Spot (cash) market prices earlier today were as follows: Gold (931.46 +5.31 +0.57% 07:42am ET), Palladium (232 +1 +0.43% 07:41am ET), Platinum (1144.5 +11.5 +1.02% 07:42am ET), and Silver (14.27 +0.18 +1.28% 07:42am ET), with a further lift in the past hour as the Euro has also strengthened.

Earlier Wednesday morning, the Euro futures were stronger (1.3662 +0.0014 +0.10% 07:29am ET). So were the Crude Oil futures (60.44 +0.34 +0.57% 07:28am ET).

Stock futures for the DJIA were showing modest strength early this morning (8470 +21 +0.25% 07:28am ET).

A growing issue for traders is the financial plight of States that are on the verge of bankruptcy, like California. Millions more jobs will be lost unless a federal bail-out program is organized, and that will impact the $USD and gold and silver markets.