EmailThe S&P 500 had alternated between gains and losses for 14 straight sessions, but that streak ended yesterday with the market gaining 0.4% on the heels of a 0.6% increase on Monday.
There wasn't any specific news catalyst for the advance, which had the semblance of being an anti-correction trade. That is, buyers were emboldened by the market's resilience in the face of negative headlines (e.g. Cyprus, North Korea, and nonfarm payrolls) that had the potential to incite some more concerted selling interest but didn't.
The lack of follow-through selling and repeated efforts to buy on dips has also made the assertions from pundits that the market is due for a correction look teethless. Accordingly, the fear of missing out on another leg higher in equities appears to have supplanted correction fears for the time being.
There was certainly a bottom-fishing element to yesterday's trade with the basic materials, technology, and energy sectors leading the gains. Those three sectors have been among the worst-performing sectors over the last month. Gold and other commodities also traded higher.
It was by no means a full-fledged bullish rally, though. The Dow Jones Transportation Average (-0.3%) and the Russell 2000 (-0.2%) didn't participate and the S&P 400 MidCap Index was flat. Basically, yesterday's advance was a large-cap affair that was good enough to push the Dow to a new record high and had the S&P 500 flirting with an all-time intraday high.
With the S&P futures trading 0.3% above fair value, it looks like an early effort will be made to pad yesterday's gains. A bullish bias in European markets following a successful Italian debt auction has provided a measure of early support, yet a batch of disappointing earnings announcements have tempered some of the buying interest.
Family Dollar (FDO) missed the Capital IQ consensus estimate by a penny and issued below-consensus guidance for FY13; Titan Machinery (TITN) missed by $0.19 and issued below-consensus guidance for the full year; MSC Industrial (MSM) had an in-line report and issued a warning for its fiscal third quarter; and Health Management Associates (HMA) issued an earnings warning for the first quarter.
On a better note, CarMax (KMX) and Fastenal (FAST) reported in-line earnings; Constellation Brands (STZ) beat by two cents; Progressive (PGR) beat by seven cents; and Littlefuse (LFUS) said it expects first quarter earnings to exceed analysts' expectations.
Another item on the market's mind today is the release of the FOMC Minutes at 9:00 a.m. ET (versus the normal 2:00 p.m. ET due to an inadvertent release yesterday to about 100 Congressional staffers). In particular, participants are anxious to hear if the reservations about the Fed's QE program have picked up at all. Then again, that may be an entirely moot point after the March nonfarm payrolls report, which clearly defied the tapering parameters of Fed Chairman Bernanke.
Elsewhere, Asian markets were mixed in the wake of China's trade report, which showed an unexpected deficit as imports rose 14.1% while exports increased 10%. The import figure is being seen as a sign of increased domestic demand that could keep the bottom-fishing interest going among some of the base metals and basic materials stocks.
Finally, the White House released its budget today for FY14, which means we should start hearing the partisan bickering pick up again. Some reports are already calling the budget D.O.A.
