What a Difference a Couple of Days Make

by: Bill Cara

[Excerpted from Bill Cara's Daily Report]

It was just last Thursday when the Financial sector was hammered (XLF -4.4%), and credit dependent speculation in the Basic Materials and Energy was also dampened (XLB -3.9% XLE -3.1%) as the equity market took a hit when traders feared that banking and credit issues are not behind us. What a difference a couple days make.

On Monday, however, after Goldman Sachs upgraded the large US banks, and futures prices in Crude Oil and Precious Metals were sent soaring at noon by fresh money sent in by the Fed, the S&P 500 (1,040.46 +15.25 +1.49%), DJIA (9,599.75 +112.08 +1.18%), and NASDAQ Composite (2,068.15 +20.04 +0.98%) all climbed a percentage point or more higher.

In an hour or two of fast markets, Crude Oil shot from 68 to 71, closing at 70.41 (+0.46/bbl +0.66%), and Gold from 2002 to 2017, closing at 1,017.30 (+14.30 +1.43%). By the close in NY, the Financial sector was leader (XLF +3.2%), followed by Energy (XLE +2.2%) and Industrials (XLI +2.1%). Even Consumer Staples (XLP +0.2%) gained. There were no losing sectors or industry groups.

Among the industry groups, the leaders were Disk Drives, Goldminers and Banks ($DDX +3.3% $XAU +3.3% $BKX +3.2%). Healthcare providers ($HCI +0.4%) were down.

The question now is whether the post-FOMC report benchmarks set Wednesday Sept 23 (2:39pm ET) can be regained: S&P 500 (1,079.12), DJIA (9,906.73), and NASDAQ Composite (2,166.02). Those prices are still +3.6% higher than the close on Monday.

Monday, the Toronto Exchange Composite (11,102.62 +144.29 +1.32%) and Venture market (1,254.25 +10.13 +0.81%) also lifted on gains in commodity prices and in the Financial, Energy and Basic Material sectors.

Among Cara 100 company stocks, speculators pushed Russia's Vimpel-Communications and Mobile TeleSystems much higher (VIP +9.8% MBT +7.4%). There were only 10 losers, and these were led south by Amazon.com (AMZN -1.3%).

The US Dollar pulled back ($USD 76.70 -0.36 -0.46%) as the safe-haven play was replaced with buying risk. The Euro (146.51 +0.74 +0.51%), Yen (111.63 +0.25 +0.22%) and particularly the Canadian Loonie (93.39 +0.81 +0.87%) soared, while the Pound remained flat (159.39 0.00 0.00%). Tuesday, there is a lot of talk about the Australian Dollar rally as the central bank there lifted the key bank rate, reflecting economic strength in the region. But the Cdn Dollar is up into the high 93-94 range that is going to put extreme pressure on that US-dependent economy.

The US Treasury Bonds ($USB 122.31 +0.03 +0.03%) closed flat, while yields on the 30-year (4.023 +0.12 +0.30%), 10-year (3.224 +0.03 +0.09%) and 5-year (2.215 +0.10 +0.45%) were a bit higher. The T-bill yield was unchanged at 0.090.

Earlier Tuesday in overseas equity markets, there was modest buying in Asia-Pacific markets, except for Hong Kong, but much stronger prices in Europe. In Asia-Pacific markets, Australia (4,597.2 +0.39%), Hong Kong (20,811.5 +1.87%), India (16,958.5 +0.55%) and the Nikkei 225 of Japan (9,691.8 +0.18%) were all higher.

At 6:55AM ET, France (3,723.9 +1.33%), Germany (5,593.7 +1.54%) and the FTSE 100 of London (5,102.1 +1.55%) were bid higher.

In futures trading at 6:57am ET, the Euro (1.4727 +0.0067 +0.46%), DJIA December futures (9621 +75 +0.79%), and Crude Oil futures (71.11 +0.70 +1.00%) were firm.

At 7:11am ET, the precious metals markets were trading higher. Spot (cash) trades were as follows: for gold (1024.94 +5.82 +0.57%), silver (16.96 +0.11 +0.65%), palladium (295 -2 -0.67%), and platinum (1305 +13 +1.01%).

It’s a bullish opening Tuesday.