Tuesday was an unusual day for the market as a serious rally
appeared to have ignited on bullish comments from a hedge fund
manager, despite a lack of obvious market-moving news.
This morning on CNBC, investment magnate David Tepper of
Appaloosa Management issued an extremely positive outlook on the
stock market, going so far as to say, "For guys that are short,
they better have themselves a shovel to get out of the grave."
The initial positive reaction in US stock futures seemed like a
simple countermove in the face of negative expectations, as it had
been rumoredon Monday that Tepper was set to come out as bearish.
However, momentum was ignited, and we saw a day that could most
definitely be characterized as "risk-on," complete with the
(INDEXSP:.INX) surging into the close to break the 1650 level for
the first time in history.
Furthermore, the small-cap
Russell 2000 Index
(INDEXRUSSELL:RUT) , which outperformed the S&P, finished at
985, putting it within striking distance of the 1000 level. We also
saw US Treasury yields rise and significant outperformance in
) was a notable outperformer in that group, surging over 3%.
However, the real standout mover of the day was
). Following its recent dramatic earnings report and news-driven
surge (due to the extremely positive reviews of its Model S car),
the stock rose a whopping 11% to $97.12 within the first two
minutes of the market open.
By the afternoon, the stock fell as low as $81.15 before
bouncing up to finish at $83.34, showing the dangers (and
opportunities) in trading high-octane momentum stocks -- especially
when they have 40%+ short interest level.
Over in economics, the April Import Price Index fell 2.6%, which
was slighter better than the expected -3.1% reading, while the
Export Price Index was in-line with expectations at -0.5%.
In international news, ratings agency Fitch upgraded its rating on
Greece to B- from CCC, which drove some optimism in Europe.
However, note that many investors are keying in on the action in
Japanese bonds as well as the yen, both of which have fallen
sharply in recent sessions.
Tomorrow's Financial Outlook
In economics, we'll see a host of data coming out, including the
MBA Mortgage Index at7:00 a.m. EDT, the PPI at8:30 a.m. EDT, and
the Empire Manufacturing Index at8:30 a.m. EDT. For a full economic
calendar, please consult our
We'll see a few major earnings reports outtomorrow , namely
) in the morning, and
) after the close.
Looking forward, we suspect tomorrow's economic data reports could
set the tone for the next move in the market. Despite positive
sentiment indicators, market participants continue to seem
. As we've seen many times this year, weakness in data doesn't
necessarily equate to weakness in stocks, so resist the urge to
make snap decisions.