Stocks stage a rally that may not have legs
The Dow ends up 101 points, but the major averages give up large chunks of gains seen early in the day. A big test for stocks comes with Wednesday's GDP report.
But if you think this suggests a bottom was reached on Monday, it's quite possible you're early.
The market still looks weak. The downtrend that started on May 22 is still in place. A big support level of 1,582 on the Standard & Poor's 500 Index ($INX) was breached on Monday. While the index closed at 1,588 on Tuesday, the index needs to test 1582 again to see if it holds.
Wednesday offers a challenge. The government will issue a third estimate of first-quarter economic growth, otherwise known as gross domestic product. The consensus is for 2.4% annualized growth. Some think it will be a little higher. If the new estimate misses the Street view, the market could be pressured. A beat will cheer Wall Street, but the buzz will be tempered about how government employment furloughs will affect the economy. These will kick in starting in July.
The S&P 500 finished Tuesday up 15 points to 1,588. The Dow Jones industrials ($INDU) added 101 points to 14,760, and the Nasdaq Composite Index ($COMPX) added 27 points to 3,348.
The downside to the rally was that the major averages gave up anywhere from 25% to 35% of their gains at the close. That is a clear signal of wariness.
The market rallied because the domestic economic news on Tuesday was actually quite good. Housing, which has been giving the economy a big boost this year, was the reason. New-home sales were up to a seasonally adjusted 476,000 units, up 2% from April and 35% from a year ago. It was also the best monthly report since 2008.
Separately, the S&P/Case-Shiller Home Price Index showed that home prices in 20 markets were up 12% in April, compared to over a year ago.
At the same time, Chinese banking officials managed to convince markets that its financial system might be stressed but isn't in danger of collapse.
It was a broad rally, even as interest rates moved higher. The 10-year Treasury yield hit 2.589%, up from Monday's 2.548%.
All 10 sectors of the S&P 500 showed gains on the day, with financial stocks leading the way. Twenty-six of 30 Dow stocks were higher. Three of the top five stocks were financials: Bank of America (BAC), JPMorgan Chase (JPM) and American Express (AXP).
Housing and housing-related stocks were strong, not surprisingly. PulteGroup (PHM) added 71 cents to $19.02. Also showing strength: Lennar (LEN), M.D.C. Holdings (MDC), La-Z-Boy (LZB), Home Depot (HD) and Lowe's (LOW).
Gold (-GC) and silver (-SI) were lower again at $1,275.10 an ounce and $19.53 an ounce, respectively. They're looking at ending the second quarter down 20% and 31%, respectively. Copper (-HG) was up nearly 5 cents to $3.0725. It's down about 10% this quarter.
Crude oil was up 14 cents to $95.32 a barrel.
More on Top Stocks
2.4% annualized growth, God! that's as dismal as dismal can get, hey douchebags out there, you wanna know what a true recovery would look like? here it goes:
try 6% growth and up, private sector jobs en masse not new gov't irs agents to find out dirt on the opposition which, libs is 90% of the country, you and your ilk represent that small 10% at best, that nobody cares about you and your commie idea of utopian society, oops! what happened at the Supreme Court?? a crack in the commie cauldron is afoot?? affirmative action is goin' the way of the dinosaur, bout time!!, leave it to a liberal azzhole to replace one form of discrimination with another, the white guilt kind which is what affirmative action is, to assuage all that guilt, that's right, vote in a commie black guy to destroy your life increase your taxes to stratospheric levels, make you pay for your own healthcare which you won't be able to since it is just too damn expense...need I go on?? how's that guilt doing?? feelin' better or worse you spineless vermin
I lived in a socialist country for over 30 years
Americans, the "uneducated" will soon find out "WHO" they elected.....a President worse than a Socialist!
In Quebec, Ti-Poil (Rene Levesque) destroyed the Province when he got elected in 1976 and Obama is working on the same agenda. To get vote in a Socialist Country, run as Anti Business and all the 47% Fed dependants will automatically vote for you.
Check my book soon to be published: "America" the uneducated.
Since Obama got elected, the so called LEGS disappeared.
The Stock Racket is functionning on Live Support, period.
Whoever thinks it still have life, then you are one who has vested everything in it and TOO BAD
you are just a sore loser.
Romney said it best, 47% of the population lives on the Fed's hook
and so is 47% of those who live on the Stock Racket Stimulus dollars.
Now 47% + 47% = 94%
That means only 6% of the population are the real investors.......i.e. workers and not BUTT growers.
I just retired. I own my home. SS Starts soon. Obozo can pump out all the lies he wants. My index is fairly simple: it's just food, gas and I'm trying to sell my old office building and it ain't moving.
My index is dropping like a rock, it hit the floor and is digging a hole.
The only fix I see is when we vote. If they are in office, get them out and give the new candidate a chance.
Copyright © 2014 Microsoft. All rights reserved.
The idea of US crude being a shelter from turmoil abroad may not be as far fetched as it seems.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.