The market finished the final session of the week in a mixed fashion. The Dow, meanwhile, recovered all lost ground for the year. For the week, the S&P 500 is up 0.6% and the Dow is up 0.4%. In general, it is an uneventful session. The only piece of economic news was the consumer sentiment, which hit a 9-month high but was slightly below consensus.  

Most major sectors finished the session modestly higher led by telecom and healthcare. The CRB commodity index dropped 1.5%. The US dollar was higher against most major currencies. Treasuries were higher with the yield curved flattened. The three-month US LIBOR declined 1 bps to 62 bps, another record low. The VIX index was little changed. The market breath was neutral on both NYSE and Nasdaq. The volume was lighter compared to the previous session.

The market closed the session modestly higher but unlike the previous few sessions, the final hour saw more sellers than buyers. The S&P 500 still managed to finish at a fresh 7-month high. Most economic news for the day came slightly better than expected. Initial jobless claims came at 601K compared to 615K expected. However, it failed to break the 600K level as some on the Street had hoped for. Continuing claims, meanwhile, climbed to a new record high of 6.82 million. Seperately, total retail sales for May increased 0.5%, the first advance in three months. Excluding autos, retail sales also increased by 0.5%. Both numbers were ahead of consensus. In other economic news, business inventories for April declined 1.1%, but that can be good for future growth as inventories at most retailers are very lean.

One interesting financial drama of the day is the testimony of Kenneth Lewis, CEO of Bank of America, in front of the House Oversight Committee. Back in February Lewis told New York state investigators that he was pressured in December by Bernanke and former Treasury Secretary Paulson to complete the Merrill acquisition. In today's testimony, Lewis seemed somewhat back away from his previous position by refusing to use the word "pressured". He also played down about what happened between him and Bernanke back in December. But there are two interesting take-aways from today's testimony. First, the whole financial system was really at the edge of collapse during October and November following Lehman's bankruptcy; Second, both Bernanke and Paulson were involved in the Merrill deal without question. The question is whether the market has got prepared if in the worst case scenario Bernanke has to step down just as what Nixon did after the Watergage scandal?

Most major sectors finished the session higher led by energy and basic materials. The CRB commodity index jumped 2.0%. The US dollar was lower against most major currencies. Treasuries were higher with the yield curved flattened. The three-month US LIBOR declined 1 bps to 63 bps. The VIX index was little changed. The market breath was positive on both NYSE and Nasdaq. The volume was heavier compared to the previous session.

The market opened the session higher following strong performance in overseas markets. However, the gains were short-lived and at its lows, the Dow was off by more than 120 points. Investors areconcerned that as the yields on the 10-year treasuries are approaching 4%, households and businesses will find it more costly to renew debts. Interestingly, the market rebounded from its lows after 3pm when the bond market was closed. And that has been the pattern recently, i.e., the final hour tends to lift the market higher. Back in October, the opposite was more likely to be the case. Since, many big players including mutural funds are only interested to change positions during the final hour of a day's trading. The recent activities suggest that portfolio managers are playing catch-up games now. Seperately, the latest Fed Beige book showed that "economic conditions remained weak or deteriorated further during the period from mid-April through May. However, five of the Districts noted that the downward trend is showing signs of moderating". Based on the Beige book, the Fed is not likely to raise the Fed funds rate any time soon. The next FOMC meeting is scheduled two weeks from now. 

Most major sectors finished the session within plus or minus 1 percent. The CRB commodity index rose 0.2%. The US dollar was higher against most major currencies. Treasuries were lower with the yield curved steepened. The three-month US LIBOR declined 1 bps to 64 bps. The VIX index was little changed. The market breath was slightly negative on both NYSE and Nasdaq. The volume was heavier compared to the previous session.

The market finished the session in a mixed fashion for the third straight time. The last time we saw such a situation was in April 2008 and the market continued to move higher for a while following that. Once again volume was extremely light, which was expected given the slow news flow.  The Treasury Departmant approved 10 largest US banks to buy back a total of $68 billion of government shares, but the news was widely expected and therefore had little impact on today's trading. Although it is a slow day for equities, many commodity prices hit fresh highs for the year. The reason, as being cited very often recently, is again the weak US dollar. So is it the weak dollar that causes commodity prices to rise? Or is it the stronger commodity prices that send the dollar down? The question is like whether we have chicken or egg first. Interestingly enough, if you stare at today's crude oil intra-day chart against the US dollar index chart, you will notice that oil price spiked at around 15 mins before 2pm eastern time while the US dollar actually started to get weakened after 2pm when the crude price was well above $70 per barrel. It is not a secret that many pension funds including Calpers are starting to build positions in anticipation for future inflation. I think fund flow is a big reason behind commodity price movements. I remember that around 1 year ago when crude prcie just broke $120 per barrel, several pension funds were talking about setting up long-only commodity funds. Coincidentally, crude price peaked a few sessions later at around $147 per barrel.

Most major sectors finished the session within plus or minus 1 percent. The CRB commodity index jumped 1.7%. The US dollar was lower against most major currencies. Treasuries were higher with the yield curved steepened. The three-month US LIBOR was unchanged. The VIX index declined more than 1 point. The market breath was neutral on both NYSE and Nasdaq. The volume was on the light side.

The market managed to finish the session essentially flat after being under pressure for most of the day. A wave of buying activities came during the final hour and lifted the Dow up by more than 100 points. However, the volume was overall on the light side. This week will be a very quiet week in terms of economic and corporate news. Therefore, I’m going to grasp this opportunity to write several parts about my 8-month long trip in China. The topics are listed below:

1. Chinese Economy Overview
2. Infrastructure
3. Consumption
4. Agriculture
5. Some Thoughts for the Next 5 to 10 Years

Most major sectors finished the session within plus or minus 1 percent. The CRB commodity index dropped 0.8%. The US dollar was higher against most major currencies for a second consecutive session. Treasuries were lower with the yield curved flattened. The three-month US LIBOR rose 2 bps to 65 bps. The VIX index was little changed. The market breath was neutral on both NYSE and Nasdaq. The volume was on the light side compared to the previous session.