After four days of declines, most market watchers expected a
relief rally on Friday. And when a finalized version of a financial
reform bill was agreed upon by the Senate and House, a rally was
Bank stocks and related financial stocks surged on the news.
Diversified financial services gained 3.4%, investment banks and
brokerages gained 3.1%, and specialized financials were up 3.4%.
Overall, the financial sector gained 2.8%.
American Express Company
) gained 3.7%, and
Bank of America Corporation
) rose 2.7%.
But just two hours after the long-awaited deal, the market
sagged even though the financials held their ground. And by the
close, only a handful of sectors had retained the gains made
Small caps in the
) jumped 1.9%, and the materials sector, led by gold and silver
stocks, held its gains.
Newmont Mining Corporation
) rose 4.61%, and
Freeport-McMoRan Copper & Gold Inc.
) gained 4.93%.
) rose 3.25%, and
Gabelli Global Gold, Natural Resources &Income
) gained 1.82%.
Volume was high as adjustments were made to match a rebalancing
of the Russell indices, which will begin trading today.
The final GDP reading for Q1 showed that the economy grew at a
rate of 2.7%, which was slower than expected. Personal consumption
growth increased, but at a rate of 3%, just missing estimates.
The final consumer sentiment survey for June showed an
improvement to 76 for the best reading since January 2008. However,
none of the economic reports appeared to impact the day's trading
The U.S. dollar fell versus the euro and the yen.
At the close the
Dow Jones Industrial Average
) was down 9 points to 10,144, the
) gained 3 points at 1,077, and the
) rose 6 points to 2,223.
The NYSE traded 2.6 billion shares with advancers ahead of
decliners by almost 3-to-1. The Nasdaq crossed 1.7 billion shares,
and advancers there were ahead by just over 2-to-1.
Crude Oil for August delivery rose $2.35 to $78.86 a barrel on
fear of a developing storm system in the Gulf of Mexico. The
weather system (Alex) could develop into the first hurricane of the
Energy Select Sector SPDR
) closed at $52.49, up 15 cents.
August gold rose $10.30 to settle at $1,256.20 an ounce, and the
PHLX Gold/Silver Sector Index
) rose 6.45 points to 185.12.
What the Markets Are Saying
On Monday, June 21, stocks advanced early following a report
that China would allow its currency to float more freely -- a
potentially good piece of news. Buyers launched a brief attack on
the 50-day moving averages, but by late afternoon, all of the early
gains were lost and the day closed on a most disturbing note -- a
daily reversal down. The negative impact of such a decline and
reversal on good news could not have been worse.
What followed were four days down, with Friday ending in a draw.
Friday's struggle was almost as significant as Monday's decline in
that the financials were ignited by the relief of the announced
agreement to finally get a financial regulation bill going. But
instead of the rally broadening, it remained confined to just the
financial and financial services groups, and the bulls had to
suffer another in a string of technical disappointments.
With the major indices now below their respective 200-day moving
averages, there has been significant technical damage to the
market. We could get a "dead cat bounce" early in the week, but
with the long Independence Day weekend ahead and some formidable
resistance above, it is unlikely that any major gains will be made
As for the resistance, rallies will most likely be contained by
the conjunction of a falling 50-day moving average and a rising
200-day moving average for each index. The market is now in a
short- and intermediate-term decline, and the long-term trend is in
doubt. If the indices close below the important February to
May/June lows, then look out below.
Today's Trading Landscape
Earnings to be reported after the close include:
Barnes & Noble, Micron and SMSC.
Economic report due:
personal income and outlays (the consensus expects 0.5% for
personal income, 0.2% for consumer spending).
If you have questions or comments for Sam Collins, please
e-mail him at
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