Stocks fell by triple digits, its eighth hundred plus point move in nine days. Bloomberg writes this is the longest stretch since 2001 the S & P has not posted consecutive gains—25 days.
The dollar strengthened as data on consumer prices showed signs inflation is perking up. The Treasury however rallied after strong interest in the sale of the two year note. New home sales unexpectedly rose to a seven year high.
Commenting about commodities, oil and gold rose to a two week high while copper rose for the fourth consecutive day.
Are the markets at a point of transition? Perhaps the bigger question, is monetary policy at a critical juncture, considering the first interest rate increase since 2006 is now an impending event? Several Fed officials have suggested 2015 growth will be stronger than expected. In recessions past, recoveries are led by the housing sector.
Is the economy about to enter into a “boom period” as suggested yesterday by St. Louis Fed President Bullard? Wow! This would be the unexpected. If the surprising strength in new home sales is a reliable indicator as cycles past, perhaps Bullard’s view is not as suspect as many suggest.
What will today’s Durable Goods data suggest? Typically rising home sales correlate positive to rising durable goods orders, orders including with and without autos.
Last night the foreign markets were mixed. London was down 0.11%, Paris down 0.74% and Frankfurt down 0.60%. Japan was up 0.17% and Hang Sang up 0.53%.
The Dow should open flat. There are several high profile merger announcements this morning which may influence trading.
Friday the initial estimate of first quarter growth is posted. Consensus is expecting a 2.2% growth rate but most will look at the momentum and inflation indicators in an attempt to determine if growth is indeed accelerating to a 3% handle, a level that may suggest a change in monetary policy. To write the incredibly obvious, the Fed and monetary policy are in the proverbial driver’s seat.
The 10-year is up 3/32 to yield 1.86%.
