EmailWe had our suspicions before the open that yesterday was going to be an uneventful day of trading. By and large, the market lived down to our low expectations. Less than 500 mln shares were traded at the NYSE and the S&P 500 declined less than 0.1%.
To be sure, there wasn't a great rotation into stocks on Monday. If anything, there was a great vacation from stocks.
Participants stuck to the sidelines for a host of reasons ranging from the big dig in the Northeast following the weekend blizzard, to the Chinese new year, to the sense that the market is poised for a period of consolidation, if nothing else, after gaining 6.4% year to date.
Their hesitation was helped along by the recognition that President Obama is going to deliver the State of the Union address tonight and that the content and tone of his speech will be used as a guide for assessing the likelihood of avoiding the sequestration slated to go into effect on March 1.
We could see more of the same listless action today, although it should be noted that most major markets open for trading in Asia and Europe have moved with a bullish bias.
Japan's Nikkei jumped 1.9% following some conciliatory remarks on the weakening yen from US Treasury Undersecretary for International Affairs Lael Brainard. It is somewhat telling about the speculative fervor in Japan right now when a comment from an undersecretary from another country moves the market nearly 2.0%.
If the Dow moved 2.0% today, it would be up nearly 280 points to 14,250. If we're all lucky, maybe Japan's undersecretary for international affairs will say something nice about the Fed's efforts to get the economy growing.
We digress. The fact of the matter is that Japan rallied again.
European bourses are registering modest gains ahead of the open in the US. France and England are leading the way for the major bourses with gains of 0.5%.
The S&P futures are trading 0.1% above fair value, so things are anticipated to start on a slightly higher note. It will be interesting to see if an 11:30 a.m. ET speech on the economy from Kansas City Fed President George, the lone dissenter at the January FOMC meeting, will alter the course of things.
So far, market participants haven't been swayed by much.
Coca-Cola (KO) beat the Capital IQ consensus earnings estimate by a penny. Yawn. The G7 issued a statement ahead of the G20 meeting affirming its commitment to market determined exchange rates. Stretch. And North Korea conducted a nuclear test it was warned not to conduct. Sigh.
