What a Difference a Day Makes

by: Bill Cara

[Excerpted from Bill Cara's Daily Report]

What a difference a day makes. Led by higher earnings from International Business Machines (IBM+11.52%) and Northern Trust (NTRS+30.39%), the S&P (+4.35%) regained a large portion of Tuesday's losses.

By the end of the day Wednesday, the DJIA (+279.01 +3.51% to 8228.10), S&P 500 (+35.02 +4.35% to 840.24) and NASDAQ Composite (+66.21 +4.60% to 1507.07) all enjoyed higher prices and volume, and once again it was notable that most of the cash flow increase was in rallying stocks, which yesterday were in the Financials sector (+14.7%).

Every major country market trading has traded higher since Wednesday’s close in NY.

The Asia-Pacific equity markets were led by: Tokyo (+1.90% to 8051.7), Australia (+1.09% to 3431.9), Shanghai (+1.00% to 2005.0), Hong Kong (+0.59% to 12268.0), and India (+0.39% to 8813.8). Noteworthy is the fact that normally volatile Hong Kong and India were slow to rebound.

The European bourses have also started the day stronger (at 7:20am ET): French CAC (+0.92%); German DAX (+1.26%); and UK FTSE (+1.26%). The Europeans are looking at the lower US equity futures this morning with a wary eye.

The Energy (XLE +6.7%) and Tech (XLK +4.8%) were also strong but not nearly so much as the Financials, which were led by the Banks ($BKX +14.6%), Broker-Dealers ($XBD +13.0%) and REITs ($DJR +10.6%).

In the Cara 100, there were 92 winners, and the volume was impressive once again: Brunswick Corp (BC +15.8%), which followed the banks higher; Deutsche Bank (DB +13.4%); Suncor (SU +11.8%), which followed the oil price higher; and IBM (IBM +11.5%), which followed the higher earnings and very positive guidance, were the leaders.

The $USD ($USD -0.96% to 85.42) pulled back sharply against all major currencies: Euro ($XEU +1.09% to 130.19); Yen (+0.59% to 111.86); Pound (+0.52% to 139.40); and Cdn Loonie (+0.94% to 79.67).

The US long bond ($USB), which had hit a peak of about 138 a week ago, sold down sharply ($USB -2.42% to 131.66). The yields on the 30-, 10-, and 5-year Treasury bonds and notes closed Wednesday at (compared to last Friday’s close) at 3.138 (2.894); 2.526 (2.304); and 1.599 (1.451) percent respectively. T-Bill yields are at 0.110 percent, which is about the same as last Friday’s close.

March Crude Oil futures yesterday closed higher (+$2.71/bbl) to 43.55. This morning, the March contracts are up to 44.13.

Gold futures ($GOLD) pulled back yesterday -$5.10/oz to 850.10, and earlier Thursday were quiet.

At 7:26am ET, the spot gold, palladium, platinum and silver were at: 849.55, 184, 928, and 11.31.

The DJIA futures at 7:20am ET were 8138, down 40. Traders are looking for yesterday’s rally in the Financials to consolidate. They also looking for some rebound in BAC, C and JPM, which are the Big 3 US banks that are behind 95% of the credit default swap problem. Insider trading yesterday after the close shows purchases by Jamie Dimon (JPM CEO) for one. That’s usually a message to the Street.