donsutherland1

This morning, the European Unon reported that its year-on-year inflation for June had risen to 4.0%. That was above the market consensus figure of 3.9%. The dollar was trading lower. At the same time, the oil had reached a record $143.67 overnight and U.S. stock market futures that had been somewhat higher had turned lower.

donsutherland1

The National Association of Purchasing Management's Business Barometer for the Midwest rose to 49.6 in June. That was somewhat above the expected figure of 49.1, a development that was likely presaged by the recent personal income and consumption data released on Friday. The prices paid index stood at 85.5 vs. the May figure of 87.5. That indicated continuing inflationary pressures, albeit somewhat more subdued from the May reading.

In addition, Goldman Sachs threw cold water on the idea that a speculative bubble was fueling the recent substantial rise in the price of crude oil. Bloomberg.com reported:

Fears that the rise in oil prices are part of a speculative bubble are "unwarranted,'' the bank said. There would be an increase in stockpiles if prices were too high relative to supply and demand, bringing excess supplies to the market, analysts Jeffrey Currie and David Greely said in a report yesterday.

"We are not observing anything approaching sustained growth in physical inventories,'' the report said. ``Current prices are supported by supply and demand fundamentals. The commodity markets are not behaving in a way that a speculative bubble would suggest.''

As noted previously, the Eurozone year-to-year inflation rate had risen to 4.0% for June. That was somewhat higher than the expected 3.9% figure.

Crude oil was trading just under $142 per barrel after reaching a record of $143.67 per barrel earlier in the day in electronic trading.

With the above generally somewhat negative-biased news, not to mention additional developments beyond these stories, the Dow Jones Industrials was down about 16 points a few moments ago. Additional developments will have an impact as the day goes on, so a decline is by no means cast in stone.

For what it is worth, the "Bear Threshhold" is 11,331.62 (a 20% decline from the Dow's October 9, 2007 peak of 14,164.53). Hopefully, the Dow will avoid that symbolic milestone.

donsutherland1

From earlier today: Additional developments will have an impact as the day goes on, so a decline is by no means cast in stone.

Arguably the biggest additional development concerned the Energy Information Administration's downward revision of April oil consumption in the U.S. CNBC reported:

The U.S. Energy Information Administration revised down U.S. April oil demand by 863,000 barrels per day (bpd) to 19.77 million bpd — 3.9 percent below year-ago levels — as surging fuel costs erode demand in the world's top consumer.

The revision showed April demand was the lowest for the month since April 2002, and came even before prices scaled to new highs in June.

Following the report, oil retreated and closed at $140.00 per barrel, down $0.21 from Friday's close. With oil's reversal came a reversal in the stock market. Shortly after 3:20 pm EDT, the Dow Jones Industrials was trading around 55 points higher.

donsutherland1

donsutherland1

donsutherland1

In line with overnight news developments and trading on the foreign stock exchanges, Wall Street opened in ugly fashion this morning. Moments ago, the Dow Jones Industrials was down nearly 100 points.

donsutherland1

As has been the trend in recent economic data toward somewhat greater strength than expected in the consensus forecast by economists, the ISM's manufacturing index showed ever so slight expansion (50.2 reading) and the construction spending contracted by a smaller amount than anticipated.

In the wake of the somewhat better than anticipated economic news, stock prices recovered from their early losses. Shortly after 11:06 am EDT, the Dow was up about 14 points.

However, embedded in the stronger manufacturing performance was increased indication of inflation. The prices paid index rose from 87.0 in May to 91.5 in June. That was its strongest inflationary reading since 1979. Once the attention shifts from overall economic activity to the price information, it remains to be seen how the financial markets will digest that latest confirmation that inflation is rising. There remains the prospect that the gloomier inflation news could stifle the market's attempted rally.

oldreliable67

Supporting the small increase in the PMI, Supplier Deliveries (i.e., the proportion of survey respondents reporting slower deliveries) rose to 55.7 versus 53.7. Though this seems to be a relatively large increase given the miniature uptick in both the PMI and Production (51.5 vs 51.2), taken together, they suggest a slight improvement in manufacturing. Note that Supplier Deliveries is one of the Leading Indicators.

As for the price action for the balance of the trading trade, the Dow is at this moment down about 35. We've seen F, GM, Toyota and Honda auto sales and they have been roughly as expected: except for Honda, down sharply with pickups and SUVs bearing the brunt of the downturn.

However, offsetting the ever-so-slightly higher PMI was the Employment Index, down to 43.7 versus 45.5, contracting at a faster rate than the previous month, and marking its eighth straight month of contraction.

Now that all these numbers are out and in the market, I wouldn't be surprised to see the market eke out a modest gain and close the day essentially even or possibly on the upside, even if only modestly. We sold 'em on the expectations, and now we're buying 'em back on the news.

donsutherland1

Wall Street’s Bull lives for another day…

After having dipped to as low as 11,183.43 (-166.58) during early afternoon trading, the Dow Jones Industrials roared back to close at 11,382.26. That was +32.25 from yesterday’s close. With the Dow Jones Industrials gaining ground, that major stock market gauge remains above the Bear market threshold of 11,331.62.

Despite today’s gain, the Dow is presently 19.6% lower than its October 9. 2007 peak. In inflation-adjusted terms, the Dow is 22.9% below its peak.

Earlier in the day, oil settled at a record $140.97 per barrel. In after-hours electronic trading, crude oil was recently quoted at $141.40 per barrel.

oldreliable67

[emphasis added]

"roared back?" You are easily pleased, sir! Unless you are being a bit facetious and I'm just not picking it up! 32.25 is approx. an 0.28% gain. Thats not a "roar" according to my trader's dictionary.

With employment data due on Thursday (instead of Fri because of the holiday), the market likely to tread water until then. Down numbers have been pretty much anticipated already and discounted into the prices, so on the release of the numbers, one could see either a relief rally (because the numbers are no worse than expected), a real honest-to-god shoot-em in, buy'em all rally (the numbers are really substantially better than expected), or perhaps even a--need I say it? a resumption of the waterfall (the numbers are even worse than expected).

Personally, as of this moment (that means for the next couple of minutes or so), I'm expecting the numbers to either as expected or somewhat better (for the economy) than expected, and we'll see a brief but sharp uptick resembling a rally. But, said uptick will at some point during the day be met with renewed selling and the market will close essentially unchanged to up just a bit.

Just my opinion at the moment. YMMV.