Daily Market Commentary

The holiday shortened week started off with a bang and losses across the board, although the international stocks moved up to give the I-fund a gain. The Dow lost a modest 64-points but big tech of the Nasdaq was hit hard and that spread into the S&P 500 and perhaps was responsible for the contagion into the small caps. Bonds were up as yields pulled back, and the dollar was down helping the I-fund.

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Stocks sold off on Friday following another inflationary pricing report - this one the PPI after Tuesday's hot CPI. The Dow lost 145-points and the losses were fairly broad, although the I-fund held onto some gains - mostly because the selling came late in the US and overseas markets hadn't reacted. Yields and the dollar were up on the PPI report and that put the pressure on the stock and bond markets.

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Stocks opened just slightly higher on Thursday but the bulls built momentum as the day went on and the indices closed at the highs of the day. The Dow gained 349-points, the Nasdaq lagged, and small caps led again. Bonds were up as yields and the dollar pulled back, but both held at tested support yesterday, which is interesting heading into today's PPI report.

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Stocks bounced back yesterday, a day after Tuesday's CPI driven sell off that had opened up some overhead gaps on the charts. Some of those gaps remain open after the rebound, while the S-fund did complete the task and fill its gap. The Dow lagged with its 152-point gain, but we saw near 1% or more gains in most of the broader indices, and a late push higher into the close had the S&P 500 recapturing the 5000 level. Bond yields and the dollar retreated after Tuesday's big gains.
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The futures market heading into Tuesday was indicating that stocks were going to open slightly lower. That was before the CPI report was released and of course that changed everything. There was some buying in the final hour, but the damage was broad as large, small, mid-cap stocks were all sold despite the recent relative strength in small caps so the falling tide sunk all ships. The dollar and yields were up sharply, and that has been troublesome for stocks, particularly small caps, for some ...