Thursday, April 2, 2009

Market Reflections 4/1/2009

The ISM manufacturing report shows a second month of improvement with new orders showing a much shallower rate of contraction, results which are raising talk that the worst may be over for the economy. The results are also giving a lift to risk taking, evident by the inflow into the stock market where the S&P 500 index ended at its highs, up 1.6 percent at 810.26. Helping the market's late rally was month-to-month strength in vehicle sales, results that offer hope for a third month of strength for retail sales. But not all the news was good as ADP is calling for a massive, larger-than-expected decline in Friday's employment report.

The dollar firmed about 1/2 cent to $1.3221 against the euro. Steady firmness in the dollar is feeding talk that the currency may be set to make a move toward the $1.2000 area especially if this weekend's G-20 plays down prospects for a world currency or a gold standard. The $1.2000 area was the high range prior to the Fed's eventful announcement two weeks ago that is was buying long-dated Treasuries, news that triggered a massive but apparently limited run on the dollar. Treasuries and gold were little changed.

Oil was not little changed, falling about 50 cents to $48.50 for May WTI following surprising builds in weekly inventory data including a giant build in gasoline stocks that is hitting at the same time that gasoline demand, due to high pump prices and the weak economy, is now thinning.

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