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Crisis Averted, US Stocks Finish Up

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Today's financial recap and tomorrow's financial outlook.

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US markets got off to a strong start today after they averted three consecutive lower closes on Friday, but the markets had a nasty reversal in the afternoon and gave back a full percent worth of gains. Yesterday, US markets were closed for Memorial Day while European and Asian markets remained open. The Japanese Nikkei Index fell 3.22% in Monday's trading and European indexes finished in positive territory.

The S&P/Case-Shiller index of home prices showed the biggest annual rate of gains in the past seven years. The 20-city composite index for March rose 10.87% from last year, more than the 10.20% consensus estimate and up from the prior month's 9.35% gain. The Richmond regional manufacturing survey rose to a -2 reading in May, up from -6 last month. The Dallas regional manufacturing survey rose to a reading of -10.5 from -15.6 the month prior. Both surveys were affected by rising activity associated with last month's decline in inventories. The stand-out was the large gain in consumer confidence, up to 76.2 in May from 69.0 last month. This reading was at a five-year high, but given the large rally in US equities, the correlation should come as no surprise.

Transportation stocks underperformed noticeably with stocks like FedEx (NYSE:FDX) remaining in negative territory throughout the day. Utility stocks and REITs also continued to underperform the broader market. Heavily shorted stocks like Tesla (NASDAQ:TSLA) continued to soar on a bullish note from Goldman Sachs analysts. Treasuries continued to remain under extreme pressure as agency mortgage-backed securities (MBS) underperformed severely and dragged the rate structure down as a whole.

Tomorrow's Financial Outlook

There will be no major economic data released tomorrow in the US. The Mortgage Brokers Association will release its weekly home purchase and refinancing index in the morning. The Treasury will also auction $35 billion of 5-year notes.

Global economic data that will be released tomorrow includes German employment figures, German consumer inflation, and the rate decision from the Bank of Canada. The German unemployment rate is estimated to stay unchanged from the month prior at 6.9% in May. Germany's consumer inflation for May is expected to tick up to an annual rate of 1.3% from 1.2% last month.

Notable earnings reports for tomorrow include Chico's (NYSE:CHS) and The Fresh Market (NASDAQ:TFM).

Twitter: @Minyanville

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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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