The S&P 500 declined by less than one point and the Dow was off by 33 points in quiet vacation week trading. The market followed its recent pattern of opening lower and hitting its lows in early trading and then grinding higher the rest of the day. The market appears to feel that the structural changes made in Europe will ensure that the issues in Cyprus remain local.
During crises, over the past few years investors rotated out of stocks into bonds. Now the pattern is to rotate within the stock market. Money is rotating into the safety area of the market and cyclical areas of the market are being sold.
Treasury bonds rallied today across the yield spectrum. The Fed purchased $1.5 billion worth of long bonds and the Treasury auctioned 5 year notes.
Commodities were mostly higher on the day. Gold, copper, crude, and natural gas all worked higher. Gold gained 0.33%, crude was higher by 0.19%, and copper rose by 0.30%. Natural gas spiked higher by 2.4%.
Financials slightly trailed the tape today. REITs were an area of strength in the sector. Some of the major brokers that had sold off over the past week were positive today. Life insurers lagged the group.
Homebuilders and building products were mixed today. Homebuilders were led higher by Beazer, 4.7% higher, and building product stocks traded slightly lower. Pending homes sales came in slightly below expectations but the trend of higher sales continues.
Transports came back today as rails, truckers, and airline stocks all showed strength. There was a favorable article in the Wall Street Journal on the railroads. The article discussed how traditional markets for railroads have improved steadily over the past few years and new markets, mainly domestic oil shipments, have grown dramatically. UAL and Southwest led the airlines higher.
Natural gas moved higher by 2.5% and finally broke through the $4 barrier. Tankers, a long time laggard, continued to rebound off recent lows.
Internet stocks were mixed. Facebook moved higher by better than 3% after they announced rolling out ad exchange on desktop. One of the original Internet high flyers, AOL, roared ahead by more than 8% today.
Source: PFS Group
