Stock Market Update

[BRIEFING.COM] The stock market has performed well today after another week of declines. The S&P 500 shows a 1.9% gain, leaving its loss this week at 2.5%. The Nasdaq Composite trades 2.4% higher, leaving its loss since Friday at 2.6%. The Dow Jones Industrial Average is 1.5% higher today, leaving its decline this week at 3.2%.

The main factor driving today's everything rally is buy-the-dip action. The market is in a short-term oversold condition after three weeks of heavy selling, which left the S&P 500 in correction territory at yesterday's close. 

Other factors cited as catalysts for the bounce include: diminishing chances of a government shutdown after Senator Chuck Schumer said he would vote to keep the government funded, easing trade tensions between the US and Canada following reports of a productive meeting between Ontario Premier Ford and Secretary of Commerce Lutnick, and speculation that China will soon provide more policy stimulus to boost domestic consumption.

The aforementioned items have overshadowed a soft economic report this morning. The preliminary University of Michigan Index of Consumer Sentiment survey for March dropped to 57.9 (Briefing.com consensus 65.6) from the final reading of 64.7 for February, marking the third straight drop in sentiment. In the same period a year ago, the index stood at 79.4.

Treasuries and rate cut expectations were little changed by the survey. The 10-yr yield stands at 4.30% and the 2-yr yield stands at 4.00%. 

The fed funds futures market sees a 77.5% likelihood of at least a 25 basis points rate cut by the June FOMC meeting, down from 81.2% yesterday, according to the CME FedWatch Tool.

Just about everything has participated in today's upside ride. Advancers lead decliners by a better than 6-to-1 margin at the NYSE and all 11 S&P 500 sectors trade higher. 

Reviewing today's economic data:

• March Univ. of Michigan Consumer Sentiment - Prelim 57.9 (Briefing.com consensus 65.6); Prior 64.7
  • The key takeaway from the report is that the weakening in sentiment cut across groups by age, income, wealth, political affiliations, and geographic regions, with inflation concerns and policy uncertainty jumping out as key factors for the drop in sentiment.