As of noon New York time today, April 12, the Standard & Poor’s 500 was up 0.47% and the Dow Jones Industrial Average had gained 0.34%. The NASDAQ Composite was higher by 0.73% and the NASDAQ 100 had moved up by 0.67%. The small cap Russell 2000 had tacked on 1.49%.
And then by the close stocks had given up all these gains and more.
For the day, the S&P 500 closed down 0.34% and the Dow was off 0.26%. The NASDAQ Composite ended lower by 0.30% and the NASDAQ 100 was down 0.36%. The small cap Russell 2000 managed to close up 0.33% on the day.
Why the “optimism” in stocks in the morning after a string of strongly down days?
One theory this morning was is that the move higher is a result of a belief–founded on selective reading of the sector subindexes in the Consumer Price Index inflation report this morning–that the 8.5% year over year CPI inflation rate marks a high for this cycle.
Whether or not that belief is correct, the bond market is behaving as if it is with yields on the 10-year Treasury down (which means bond prices are up) 8 basis points to 2.70%
The CBEO S&P 500 Volatility Index (VIX) also pulled back by 6.32% in morning trading to 22.83. Less fear and less need to buy hedges against market volatility that action in the VIX says.
The afternoon brought second thoughts–or maybe just a chance to sell and take a profit on the morning’s gains.
The VIX moved back to near dead even at 24.51, up just 0.14% on the day.
Energy prices were up strongly in the morning too–on a belief that global economic growth would be stronger than feared, I assume. U.S. benchmark West Texas Intermediate rose to $101.00 a barrel, up 6.71% on the day. International benchmark Brent was up to $105.21 a barrel, a gain of 6.73%.
Oil itself finished strong with West Texas Intermediate gaining 6.78% on the day.
Oil stocks rose in the morning and then gave back some of those gains in the afternoon. For example, Pioneer Natural Resources (PXD) was ahead 3.80% at noon and then up 2.45% at the close. The Energy Select Sector SPDR ETF (XLE) was up 3.12% at noon and up 1.67% at the close.
Let’s see if tomorrow’s first bank stock earnings report–from JPMorgan Chase (JPM)–leads to a continuation the morning’s buying or the afternoon’s selling.
