The Dow Jones Industrial Average was sitting pretty at the end of January. And then it wasn't, as a correction hit. Since then it's gone up and down and up again, and the wild swings don't seem likely to end any time soon. With that in mind, we're keeping a semi-live look on the volatile markets. Here's the latest from Barron's reporters...
1:23 p.m. So much for correlation. In a reverse of yesterday, though not of the same scale, it's the Dow Jones Industrial Average that held onto its gains, while the Nasdaq Composite has sunk into the red. The S&P 500 has dipped 0.1% to 2780.74, while the Dow Jones Industrial Average has risen 25.93 points, or 0.1%, to 25,204.54, and the Nasdaq Composite has dropped 0.4% to 7561.45.
Of course, the moves are so small, that they are all but meaningless, a sign of a little bit of portfolio trimming here, additions there. What does matter is that inflation remains low, as we saw in today's consumer price index. Yet the market isn't moving, as you might expect it to be. MKM's Michael Darda thinks he knows why: "The FOMC appears to be getting increasingly confident that slack has nearly fully diminished and that its job is now to limit overheat risks," he says. "As a result, if we project ahead a year or more, it is more likely than not that growth will slow back toward trend."
And slower growth would mean less upside for stocks.
6:58 a.m. The setup this morning looks a lot like yesterday's. S&P 500 futures have gained 0.2%, while Dow Jones Industrial Average futures have risen 60 points, or 0.2%. Only Nasdaq Composite futures, which have ticked up 0.1%, are markedly lower than they were Monday morning.
Of course, yesterday ended with the Nasdaq at a new high and the Dow Jones Industrial Average Down 150 points, so let's hope it's not a repeat. That's a strange result considering that correlations--the statistical term for the tendency of stocks to move in lockstep--are quite high right now. DataTrek's Nicholas Colas notes that average price correlation of the 11 sectors of the S&P 500 to the index itself was 0.87 over the last month. "If you have forgotten your stats math, all you need to know is that this reflects a very high level of common price movement," Colas writes.
We'll see if that correlation reasserts itself today.