A story in the Wall Street Journal questioning whether this year's 40 percent rally is too much too much fast led many to ask the same question, tripping profit-taking on long positions and the setting of shorts. A weak Empire State report raised questions on how soon the manufacturing sector will begin to expand, while a disappointing housing market index raised the prospect that the housing sector may be a continued drag on the recovery. Stocks posted steep losses with the S&P 500 down 2.4 percent to just under 925.
G8 comments over the weekend on the importance of the dollar, including from dollar-skeptic Russia, made for a strong rally in the dollar index which jumped 1.2 percent to 81.63. The gains in the dollar cut into the inflation-hedge premium for commodities which were down from grains to basic metals. But natural gas wasn't down, up nearly 10 percent on the session. Given lack of available storage for natural gas and forecasts for cooler than normal weather, traders were left asking whether investment demand, not physical demand, was behind the enormous jump. The G8 in their communique fired a shot at investors and speculators, blaming them for this year's run-up in commodities and warning of oversight in related derivatives.