After an Early Splash of Buying, Markets End Down

[Excerpted from Bill Cara's Daily Report]

Following a splash of buying at the open Wednesday, spurred by higher overseas market prices, traders decided to await more news from the US treasury auction before adding risk, deciding to take profits, however small. The final 90 minutes, however, was a boost, so that there were small losses at the close.

At the bell, the DJIA (8,739.02 -24.04 -0.27%), S&P 500 (939.15 -3.28 -0.35%) and NASDAQ Composite (1,853.08 -7.05 -0.38%) were underwater.

The Toronto Composite (10,597.98 +50.12 +0.48%) managed to eke out a small gain because of the oils whereas the more junior mining oriented Toronto Venture Board (1,142.39 -1.57 -0.14%) did not.

Earlier Thursday, equity prices were extremely quiet in Austral-Asian markets. Japan’s Nikkei 225 (9,981.3 -0.10%), Hong Kong (18,791.0 +0.03%), Shanghai (2,797.3 -0.67%), Aussie All Ordinaries (4,046.7 +0.76%), and India’s BSE 30 (15,411.5 -0.36%) were quite unremarkable.

In the past few hours, however, the European equity bourses had been led higher by the Financials. The French CAC (3,322.9 6:51AM ET +0.23%), German DAX (5,083.3 6:36AM ET +0.64%) and UK FTSE 100 (4,456.8 6:36AM ET +0.45%) are up on the day.

In US trading Wednesday, the Utilities (XLU+1.6%) and Energy (XLE+0.9%) were the leaders, while Financials and Consumer Discretionary were again locked at the hip, dragging the market back (XLF, XLY-1.5%).

The industries that performed best were Oil Services ($OSX) and NatGas ($XNG), both up +1.4%. Financials were held down by REITs ($DJR -2.2%) and Broker-Dealers ($XBD -1.8%), and also the Biotechs ($BTK -1.5%).

The Cara 100 company stocks that lifted most yesterday were Kookmin Bank (KB +7.3%) and Exelon Corp (EXC +5.1%). South Korea’s Kookmin was aided by a strong UN resolution admonishing nuclear testing by North Korea. Exelon’s Board was to meet regarding its bid to acquire NRG.

optionsXpress (OXPS-6.5%) and Carnival Cruiselines (CCL -4.7%) led the Cara 100 losers. OptionsXpress reported slower business with 7% fewer trades in May. Rising fuel costs are concerning Carnival traders.

The $USD rebounded Wednesday (80.23 +0.41 +0.51%) against all major currencies except the British Pound (163.53 +0.46 +0.28%). The Euro (139.72 -0.94 -0.67%), Yen (101.85 -0.85 -0.83%), and Cdn Dollar (90.19 -0.41 -0.45%) all gave up ground against the USD. The $USD is testing the short-term resistance at 81, having found support at just under 79.

In active US bond market trading, the US Treasuries were smashed Wednesday, wiping out the gains of the past few days. The US long Bond plunged ($USB 114.12 -0.95 -0.83%). The yields for 30-year (4.749 +0.96 +2.06%), 10-year (3.936 +0.78 +2.02%), and 5-year (2.916 +0.62 +2.17%) lifted as those bond prices fell. Treasury bill yields were unchanged (0.170).

Wednesday, $GOLD had a pop after 7am ET but that move was quickly quashed, and the precious metal closed down a tad (954.30 -0.60 -0.06%). This morning, it was looking a tad weaker too despite a stronger Euro and weaker USD. The spot (cash) market prices for precious metals were as follows: Gold (953.50 -1.95 -0.20% 06:51am ET); Palladium (258.5 +5.5 +2.17% 06:45am ET); Platinum (1265 +6 +0.48% 06:45am ET); and Silver (15.14 -0.09 -0.59% 06:51am ET).

Dollar futures were down earlier today. The Euro was higher (1.4017 +0.0049 +0.35% 06:38am ET).

Crude Oil futures continued lifting yesterday (71.34 +1.33 +1.90%am ET), and this morning were even trading above 72 for a bit (71.900 +0.570 +0.80% 06:35am ET). This action is speculation because the demand is just not there. The speculation is coming from the humongous liquidity pumped into global financial systems earlier this year, which is likely to impact the markets for a time. But the higher oil price is affecting share prices of heavy consumers like Carnival Cruise (CCL -4.7%) and the Airlines ($XAL -2.3%).

US equity futures for the DJIA were priced a tad higher Thursday (8776 +22 +0.25% 06:38am ET), with the Financials showing some bids.