Daily Market Recap

No Sparks on Quadruple Witching Day

The market rallied at the end of trading yesterday as rumors regarding Spain started to hit trading desks. Those rumors continued to spread as Europe opened for trading. Reuters printed an article saying the government in Spain is working with European leaders to structure an economic reform package. This was viewed favorably by the markets. Spain could release the details of the plan as well as a 2013 budget in the next week. The Spanish market was up 2.1% in response.

European markets were generally higher overnight. The German DAX was up 0.9% on strength in financial stocks. Several German banks and insurance companies disclosed improved capital positions.

The Minneapolis Fed President issued a statement near the close yesterday where he said he is on board with Chairman Bernanke’s plan. Prior to this he had been a hawk that felt too much accommodative action will be inflationary.

Stocks started the day higher on heavy volume due to today’s quadruple witching of options expiration. After reaching session highs early in the trading day the major indexes spent the rest of the day selling off. The S&P 500 closed off 0.01%.

Telecom stocks were in favor again today. The launch of the Apple iPhone 5 will be a catalyst for these names. Last week some analysts voiced concerns that the service providers were offering too much in the way of subsidies to spur subscriber growth. This week I guess they rechecked their math. Subsidies aside, subscriber growth at the telecom companies will get a large boost from the latest phone from Apple.

Housing was an area of strength today. KB Homes led the way. In a presentation they gave an update about their various business units. Here is an excerpt from their presentation, “It is clear that the recovery in housing is accelerating as inventory levels are declining and home prices are on the rise. Sales rates are predictable for the first time in a while. The company is seeing dramatic improvement in California as the continued strengthening in the coastal markets is now spreading inland to Sacramento, the Central Valley and the Inland Empire. Inland Cali is different from 6 months ago, inventories are falling and prices are rising; ASP in Cali is +17% year over year. Strength started at the coast and is spreading to the east. The company's Central (mostly Texas) region is also strong. The southwest is in full recovery; Las Vegas is a ‘shining star'.”

Crude had another volatile day today. Cruse hit a session high of $93.75. The session low was $92.61. Crude finished the week 6.5% lower. Oil came under pressure on weaker than expected inventory data that showed a large build of 8.5 million barrels against expectations for a build of just 1.4 million barrels.

Gold traded at a new sixth month high as the dollar was in negative territory most of the day. Gold reached a high of $1790 in the morning and traded as low as $1771.70 before closing at 1778.1 with a 0.3% weekly gain.

Source: PFS Group

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