Investors appeared to back off yesterday, perhaps to reflect on
Fed Chairman Ben Bernanke's warning that an economic recovery "may
not be self-sustaining," although he said he didn't see a
double-dip recession coming either.
When pressed further about the state of the economy and
inflation, Mr. Bernanke said that he saw no inflation now and was
100% certain that he and the FOMC could deal with it if and when it
became a problem. He also said that the Fed could possibly commit
to more than the $600 billion of asset purchases previously
Telecommunications stocks rose yesterday, helped by a 6.4% gain
Sprint Nextel Corporation
Financial stocks took a hit after a Nomura analyst said that
some U.S. banks could be downgraded early next year after credit
rating firms review banks following the implementation of new
government regulations with less government support.
) increased its outlook and the stock rose over 10%, but it wasn't
enough to offset other losses in the sector. And
Cisco Systems, Inc.
) rose 1.9% following an upgrade by
Oppenheimer Holdings Inc.
) to "outperform" from "perform."
The U.S. dollar rose against the euro yesterday, as concerns of
further problems in the euro zone rose. The euro was quoted at
$1.3321, down from $1.3411 on Friday. Treasurys rose, which brought
the 10-year note's yield to 2.944%.
At the close, the Dow Jones Industrial Average fell 20 points to
11,362, the S&P 500 lost 2 points at 1,223, and the Nasdaq rose
3 points at 2,595. The NYSE traded 804 million shares with
advancers and decliners at a stalemate. The Nasdaq exchanged 423
million shares with advancers ahead by 1.3-to-1.
Crude oil for January delivery rose 19 cents to $89.38 a barrel,
Energy Select Sector SPDR
) gained 22 cents at $66.04. Gold hit another new high with the
December contract settling at $1,421.20 an ounce, up $5.90. The
Gold/Silver Sector Index
) rose 3.49 points to 228.76.
What the Markets Are Saying
Last week's test of the support at S&P 500 1,174 and its
reversal from the 50-day moving average should put a smile on the
bulls' faces. But until the major indices are able to penetrate to
new highs at Dow 11,451 and S&P 1,227, the picture is not
perfect. The Nasdaq resolved its problem yesterday by setting a new
high at 2,595, which confirms its long-term uptrend.
Today we may see an early move to new highs due to the agreement
by President Obama and Republicans to extend the Bush-era tax cuts
for two years, along with an extension of unemployment benefits and
a 2% cut in payroll taxes. But this situation has been hanging over
the market for some time, so an early rally could conceivably turn
down this afternoon - you know, the old "buy the rumor, sell the
Were that to happen, traders should concentrate on the next
support levels for downside targets. For each index, the immediate
support is at the indices' 20-day moving averages:
Dow 11,206 S&P 500 1,200 Nasdaq 2,536
We'll consider upside targets when the Dow and S&P hit new
highs. For now, the most positive technical development would be
for stocks to rally on a convincing rush of high volume.
For one solid stock to buy, see the
Trade of the Day
Today's Trading Landscape
To see a list of the companies reporting earnings today,
For a list of this week's economic reports due out,
If you have questions or comments for Sam Collins, please
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