EmailThe Dow Jones Industrial Average hit a record high last week while the S&P 500 edged closer to doing the same. At Friday's close, the S&P 500 stood just 25 points, or 1.6%, away from topping the intraday high of 1576.09 it hit in October 2007. If this week ends up playing out like last week, then more records will fall on Wall Street.
As it stands now, the S&P 500 won't be making an early assault on its record-setting attempt. The S&P futures are trading 0.1% below fair value.
The early weakness, which isn't all that weak, probably has more to do than anything else with an expectation that there will be some profit taking after last week's 2.2% gain which was capped off Friday with the encouraging employment report.
There still wasn't a lot of volume behind Friday's advance, yet it was notable that stocks moved higher while the Treasury market got hit pretty good with selling pressure. That suggested to us that the weakness in the Treasury market had more to do with an unwinding of safety trades than it did with a fear of the Fed pulling back on its asset purchases sooner rather than later.
Treasuries are little changed this morning and may be waiting to take their cue from the stock market given that there aren't any economic releases today.
Outside the US, some added attention is being paid to a batch of uneven economic data out of China, which featured a 3.2% year-over-year rise in consumer inflation that is the highest level in 10 months. Fixed asset investment rose 21.2% year-over-year (20.8% forecast); industrial production increased 9.9% year-over-year (10.5% consensus); and retail sales grew 12.3% (15.0% expected).
Frankly, there hasn't been a strong reaction to China's economic news. Asian markets were mixed. European markets are lower, but losses are generally less than 0.5%. Spain (-1.1%), Italy (-0.8%), and the UK (+0.2%) are exceptions to that rule.
Italy continues to be a source of consternation as there continues to be no sign of reaching a conciliatory agreement on a coalition government.
Italy, though, is still background noise for the US equity market, as are most things it seems. The price action itself has taken over as the lead item.
Participants will be watching the tape again today as there is little in the way of corporate news to set a definitive path at this juncture. Some headlines of note include an earnings miss and disappointing guidance from Dick's Sporting Goods (DKS) and word that Carl Icahn has entered into a confidentiality agreement with Dell (DELL).
The equity market may be due for a breather, yet the fear of missing out on further gains continues to be a supportive driver.
