Stocks Squeeze Higher in Volatile Trading
Today's financial recap and tomorrow's financial outlook.
S&P 500 (INDEXSP:.INX) futures were positive in the early going, but sank lower into and after the release of two important economic numbers at 10:00 a.m.
The May ISM Manufacturing index was reported at 49.0, representing a contraction in activity and coming below expectations of 50.5. Likewise, April construction spending rose just 0.4%, easily missing the consensus forecast of +0.9%.
The subsequent action fell into the "risk-off" category. US Treasury bond prices rose, bucking their recent slump, while junk bonds extended Friday's late-day collapse. We also saw serious weakness in the Russell 2000 (INDEXRUSSELL:RUT) small-cap index, as well as in financials and homebuilders.
The high-beta realm, including stocks like Netflix (NASDAQ:NFLX), Tesla Motors (NASDAQ:TSLA), as well as the biotechs, also took a serious hit.
However, the despair didn't last very long, as many of these areas of the market staged intraday comebacks, one reason likely being that weak economic data makes it unlikely that the Fed will taper its QE activities. Dividend-paying stocks, notably utilities, had a strong day, indicating that at least for one day, investors are less fearful that the Fed will pull back and allow interest rates to rise.
In fact, by day's end, the major averages were firmly in the green.
Tomorrow's Financial Outlook
Nonetheless, even though the calendar is light, the market is likely to stay volatile as tensions remain high, particularly since we're heading into the May nonfarm payrolls report on Friday.
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