Tuesday, March 24, 2009

Market Reflections

Stocks surged in reaction to the Treasury's latest move to stimulate the banking sector, this time a loan-based program to encourage private funds to bid for toxic assets. In a reversal of the disappointment that greeted an initial Treasury plan in early February, the S&P 500 jumped 7.1% to 822.91 for the biggest gain since the violent swings of October. Adding to the optimism was a big jump in existing home sales, a gain underscoring prospects that government stimulus will make for further jumps in future months. One sour note is that gains were made in comparatively low volumes especially for S&P futures.

Money continues to move out of the dollar which fell nearly 1 more cent to end at $1.3548 against the euro. The exit reflects concerns over monetary inflation and also increasing demand for risk. Concerns over inflation continue to help oil as is the improving economic outlook. May WTI gained nearly $2 to $53.84. Despite the fireworks in the stock market, money stayed in the Treasury market where yields were little changed with the 3-month yield ending at a very tight 0.19 percent. Gold dipped $15 to end at $940.

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