Market Wrap: Stocks Snap Losing Streak on Increased Risk Appetite
May 18, 2011
Stocks finished higher on Wednesday with the Dow, S&P and Russell all snapping three-day losing streaks. The Russell 2000 led the major indices in terms of percentage gains with a return of +1.6%, while the Midcaps gained +1.51%, and the NASDAQ rose +1.14% (the DJIA lagged with a gain of +0.65%).
Although there were several stories in the market, there did not seem to be any one specific driver to the improvement in sentiment towards stocks.
The decision to flip the risk switch to the “on” position was best evidenced by the biggest one-day rally in commodities in two months. What was interesting here was the fact that commodity rally came despite the lack of direction from the currency market, where the dollar index finished little changed on the day. Good old-fashioned fundamentals provided a favorable fundamental backdrop for the outsized strength in commodities.
StreetAccount notes that the market’s gains were also underpinned by some pushback surrounding the recent Greek restructuring chatter, the more dovish-leaning BoE minutes, a slowdown in China housing inflation, better earnings out of tech and a quiet day on the economic calendar following a recent string of downside surprises that exacerbated concerns about some softening of the momentum behind the economic recovery.
Finally, no news was good news out of the Fed as there was nothing surprising in the minutes from the late-April FOMC meeting. Traders did discover that the meeting did include the discussion of exit strategy issues. However, the minutes still seemed fairly supportive of the “recovery trade”.
Have a pleasant evening.
S&P 500 - Intraday
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