Markets Follow Through

US equity markets traded higher for a fourth consecutive session yesterday, fueled by FOMC Minutes that spoke to market volatility and by additional stability in crude pricing. All major market sectors added to recent gains as investors jumped back into compressed valuations in hopes that crude doesn’t reverse lower in the near term. The NASDAQ once again outperformed to the upside by gaining 2.21%. The S&P 500 gained 1.64% and the Dow Industrials added 1.58%. Volume on the NYSE rose by a robust 12.76% and on the NASDAQ by 9.1%. Impressively, yesterday’s gains come on top of our recent reversal. Yesterday’s rally allowed for market direction to shift from “correction” to “uptrend under pressure.” That said, and though I have called for a near term bottom, I remain cautious.

Much of the fuel behind yesterday’s follow through rally came as a result of crude’s relatively range bound price action in conjunction with the prospects of a multilateral agreement on production restraint. Also providing some confidence for investors was the tone set in the FOMC Minutes which clearly underscored concern over stock and commodity market pull backs, the impact on inflation and the prospects for further growth.

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Away from the FOMC Minutes and crude’s positive price action, the economic data on the day, as a whole was mixed. Housing Starts for January were 1.099 M, below expectations of 1.175 M. The PPI-FD – M/M change for January was a bit hotter than consensus coming in at 0.1% versus expectations of -0.2%. Less Food and Energy the M/M change was 0.4% versus 0.1% consensus. Both were welcome as they speak to the increased likelihood of at least some producer price inflation. Another welcome economic signal came to markets in the form of Industrial Production for January. For the month it was 0.9%, Manufacturing was 0.5% and Capacity Utilization was 77.1% – all above consensus expectations.

Today’s Economic Calendar will be dominated by Weekly Jobless Claims at 8:30 AM EST, Leading Indicators (-0.2% consensus) at 10:00 AM EST and the EIA Petroleum Status Report at 11:00 AM EST.

Flickr photo: “sitting and wishing and hoping” by Apecut79