Daily Market Update – February 26, 2015 (Close)
Yesterday set another new closing record high for the DJIA but not in the same way as it had the day before.
While the second day of questioning of Janet Yellen, this time by the House of Representatives side of the 2 bodied chamber was more contentious than on the first day, Yellen didn’t slip or say anything to spook or delight markets.
Instead of a strong showing as when the more genteel legislative body did its questioning, yesterday the market barely eked out a gain, as the S&P 500 actually fell a little.
This morning, ahead of the opening bell, all appearances were for another listless day of trading as the real impetus for any kind of move may be in store tomorrow as the GDP statistics are released.
And that was exactly how the entire day unfolded, as the trading range was again a narrow one and there was very little of interest going on anywhere.
As we get set for tomorrow’s GDP release, with a few months of lower energy prices having been reality the expectation would be that some increase in GDP would become evident, even though GDP also includes gasoline sales, which itself would be expected to put a damper on the total growth in GDP.
In the meantime, as retail sales reports and earnings are now nearly complete, the picture is mixed and guidance that has been provided seems to be less optimistic than has been expected.
You really do have to wonder about that altered guidance that Macys gave about two weeks ago and ask what happened between then and yesterday when they released their earnings and didn’t seem as optimistic about what the near term future was holding for them.
Maybe it was the weather, as it was last year, but so far no one is really pointing a finger in that direction, as everyone instead is blaming currency headwinds, although that shouldn’t be too much of an issue for Macys.
Any boost to markets that could have come from strong earnings reports and enthusiastic guidance hasn’t materialized and may have to wait until next quarter, or until someone steps forward with altered guidance between now and late May.
With only a handful of positions in play for tomorrow’s contract expirations there’s not likely to be much trading action as most appear to be in position to be assigned. Of course, that could change fairly abruptly with a disappointing GDP number or a surprisingly strong number that would re-instill fears of interest rate hikes, despite Yellen’s dovish tones over the past two days.
Equally possible and as was the case as the afternoon wore on, a sudden drop in oil prices could do something to upset the cart, as well.
At the same time, the world appears to be fairly quiet, despite any number of items that could pop up to upset things. Hopefully, during a period of prolonged quiet the market won’t do what people sometimes do and become overly introspective.
For the most part I like my markets in a state of denial or aimlessly moving ahead.
With the exception of a couple of strong moves higher over the past few weeks that’s exactly what it has been doing. Doing so in a slow and methodical way makes it less likely that a trap door will be suddenly sprung open and undo all of the good that’s been done this February.
Hopefully tomorrow’s GDP will be another in a series of reports that are right in line with expectations and the market will continue its calm climb while those other markets, bonds, oil and precious metals, continue their uncertain paths, but actually go nowhere too distant.