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.

By Charley Blaine Jun 25, 2013 6:14PM
Stock market © Digital Vision/SuperStockStocks rallied on Tuesday. All hail the rally.

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.

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69Comments
Jun 25, 2013 6:39PM
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They can release all of the made up data they want; that doesn't mean everybody believes it.  It's so convenient when the market is tanking, that the White House releases data saying that everything is terrific and getting stronger, and then regular people look at their paychecks and their grocery store bills and their gas bills, and they know we have super high inflation.  The jobs are all part-time, and hardly anybody is offering benefits anymore.  We are giving billions of dollars away to foreign countries, and half our country is ready to retire without a pension, with bad health care, no prescription drug coverage and the highest drug prices in the world.  We have low interest rates and nobody can qualify to buy anything.  Yes, everything is wonderful.  let's celebrate.
Jun 25, 2013 8:06PM
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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

Jun 25, 2013 8:21PM
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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.

Jun 25, 2013 10:05PM
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Consumer confidence at highest level in 5 1/2 years??????????Are they now polling people with amnesia and dementia?
Jun 25, 2013 8:13PM
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Nothing more than a quick spike on the -700 point dip so chumps can 'get in'...tomorrow that 'buy in' will be gone!
Jun 25, 2013 6:36PM
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I only clicked on this article to see if Anthony wrote it.
Jun 25, 2013 6:29PM
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One gazillion Obama dollars.   mmm, mmm, mmm!
Jun 25, 2013 8:08PM
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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.

Jun 25, 2013 8:32PM
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I called today-- bravado or machismo or plain old arrogance. Bernanke pumped out as much as $250 billion in the middle of yesterday only to see it totally lost and his precious Dow drop another 140. The WHOLE WORLD watched him pull that chicken move and knows now that he has no "plan," he's just scared of what happens next. We're more than a quadrillion in the hole worldwide and half of it lacks jobs, the other half have jobs that don't create or sustain economy. The whole- Central Bank pumping initiative was a bust and history looks to be preparing to repeat itself. There are rightful protests around the world and both major super powers are dysfunctional and compromised. Know this... we don't have a Bastille to tear down with our bare hands, but we can easily stop buying imported crap and hunker down on privileges desires and luxuries. Imagine the Chaos on Wall Street after 3 months of gasoline surpluses without storage for it, every retailer forced flat and support staff walking out while their bosses are at the country club or just because they've had enough harassment. There is NO back up plan.
Jun 25, 2013 6:38PM
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Screw the so-called pundits - they are trying to support their positions
Jun 25, 2013 7:17PM
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Wall street already has given up most of any gain investors had in 2013 so whats there point?? It didnt go down on poor earnings or a bad economy or anything earth shattering. It went down on rumor, guessing, and what i think might happen. Isnt that the most impressive financial decisions making i ever heard of. This is why invstors wont put money in stocks because Wall Street never makes any financial decisions that hold any value. Its just run away idiots with money.
Jun 25, 2013 9:39PM
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Dont tell Obamma what comes comes after a trillion
Jun 25, 2013 7:44PM
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GDP gets reported tomorrow!

Har har har me mateys furl the sail for ye be a comin' into port!
Jun 25, 2013 7:30PM
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No legs?  Maybe....but its still got arms.



Jun 26, 2013 3:25AM
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Market rally does not have legs. The overvalued market never had legs since The Fed Reserve propped It up with welfare under the QE's. Reduce that and wheelchair stocks will surge.........
Jun 26, 2013 7:27AM
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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.

Jun 25, 2013 6:39PM
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Never fear there will always be more beer!

Har har har!
Jun 26, 2013 1:24AM
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It only has a big vagina. Always has and always will. It will take anything for free expect more in the future.
Jun 26, 2013 2:02AM
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Amazing how the same data points that were once considered great and the Gospel according to John under Bush are now considered bad under Obama.
Jun 26, 2013 2:23AM
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They'll put out what you wana hear! Protest will move here. Quantum dawn 2 cyber attack drill against banks and Wall St could mark/mask real cyber attack cause bank holiday and capital controls just like Cyprus.
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