Friends
Volatility has surely picked up, hasn’t it? Today, stocks fueled by more early disruption in bond prices, opened lower and continued lower most of the morning. By late morning the Dow was down 181 points led by a sizable drop in consumer staples, telecom, drugs, utilities and other interest rate sensitive securities. If interest rates actually do continue to rise a bit, shares of companies that were bought as “bond substitutes” because their dividends offered returns that investors could not derive from bonds, could continue to give back some of the gains they’ve accrued over the past few years.
As for today’s trading, stocks did recover some from the late morning lows, but the Dow Jones Industrial Average did give back yesterday’s gains falling 106 points to finish the day at 15,302. The S&P 500 was down 11 points to close at 1648. Gold was up $15 to trade at $1393 per ounce, while oil was down $1.78 to trade at $93.23 per barrel WTI. The S&P did hold the 1644 near term support level, but the 1674 resistance level seems to be formidable for the moment.
Tomorrow we’ll get our first revision (second look) at first quarter GDP as well as the weekly jobless claims number. On Friday, we get a look at the Chicago PMI number. We’ll see if traders glean any pertinent information from these numbers. But, one thing we can say for sure right now is that uptick in interest rates has introduced a new variable to the equation. If stocks are going to continue to rise, what groups are going to carry the water? Yes, things have a little different feel right now.
Have a nice evening everyone.
