For stocks, the lack of a selling swarm counts as a win
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The stock market faded near the closing bell today, but most major indexes still closed higher after Tuesday’s big rally -- fueling hope that Wall Street’s turnaround has some legs to it.
Traders were mostly grateful for what didn’t happen: a demoralizing give-back of much of Tuesday’s 379-point, 5.8% surge in the Dow Jones industrials.
Instead, the market traded in a narrow range for much of the day, which at least suggested that investors weren’t rushing to cash out after the previous session’s rebound.
The Dow finished up 3.91 points to 6,930.40. The back-to-back gains today and Tuesday were the first in a month.
‘I’m pretty pleased with the action,’ said Anthony Conroy, head trader at BNY ConvergEx in New York. ‘I think people are starting to put a little money to work. This is more than just ‘short covering.’ ‘
Rising stocks outnumbered losers by 4 to 3 on the New York Stock Exchange, and beaten-down financial shares led the way for a second straight session.
For what it’s worth, here’s a potential sign of Wall Street’s optimism about its own future: Shares of brokerage Morgan Stanley are up 36.5% in two days, to $22.51, lifting the stock’s year-to-date advance to 40.3%. Goldman Sachs Group, up 25% the last two days to $92.39, is up 9.5% for the year.
Yet many analysts say they’re still operating under the assumption that this is a rally in an ongoing bear market, like the upturn that lifted the Dow nearly 20% from Nov. 21 to Jan. 2.
Barry Savitz, a partner at Greenwich Prime Trading in Greenwich, Conn., says the market could bounce 15% to 20% from Monday’s 12-year lows. But he doesn’t see it as more than a trading opportunity for the nimble.
‘I’m still looking for a real washout in the market’ ahead, Savitz said. Bear-market bottoms, he says, usually occur at the point where almost no one is looking even for a short-term rally.
His hedge fund clients, Savitz said, ‘don’t trust anything they hear’ about the market or the economy. ‘They’re trying to preserve their capital.’
That mentality may have helped the Treasury bond market late today: The government sold $18 billion of new 10-year T-notes earlier in the day at an annualized yield of 3.04%, which was above expectations. Soon after the auction, buyers flooded into the market and drove the market yield on the 10-year notes down to 2.91%.
The rush back to Treasuries signals that ‘bond investors still remain skeptical of stocks’ latest move,’ said George Goncalves, a bond strategist at Morgan Stanley in New York.
The Treasury will sell new 30-year bonds Thursday.
-- Tom Petruno