The market finished the last trading session before the holiday weekend in a downbeat tone. The Dow lost more than 140 points today. For the week, it was off by more than 500 points, resulting in one of the worst weeks in more than 3 months. The S&P didn’t fare much better either. It ended the session lower by 1.3% and for the week, it was off by 3.5%. There was no obvious reason behind today’s sharp sell off other than maybe some investors simply didn’t want to hold positions over the long weekend. The economic news was more or less in line with expectation. The sales of existing homes fell 1% to an annual rate of 4.89 million, bringing the inventory to sales ratio to a record high of 11.2 months supply. Meanwhile, the median price fell 8 percent from the previous month.
All 10 major sectors were in red. Transportations and commodities were underperforming the broad market. Interestingly, the latter faced some sell off despite a rise in the CRB commodity index. The US dollar was weak against most major currencies while treasuries gained some ground following the weakness in the equity market. The VIX index jumped more than 8% but remained below 20. It should be noted that historically, the day following the Memorial Day is not treating bulls very well although seasonality does point to some positive movement heading into the month end and the start of the new month. In the meantime, hope everyone enjoys a nice weekend.

The market rebounded modestly following sharp sell-offs in the previous two sessions. The Nasdaq, the best performer among the big three, registered a gain of 0.7%. The news on the economic front was generally positive. The weekly claims came at 365K, down 9K from the previous week’s revised figure of 374K. Economists expected a reading of 372K. The continuing claims were unchanged from the previous week. A sharp reversal in the crude oil price also helped market sentiment.
Financials finally broke its 4-day losing streak and gained around 1%. Energies were the main laggards due to the drop in oil price. The volume was on the light side compared to previous two sessions. However, one possible reason for the light volume may be due to the upcoming holiday weekend. The US dollar was higher against most major currencies while treasuries were sold off for a second straight session. The CRB commodity index ended the day lower by 1.3%.

The market sold off sharply for the second day in a row. The Dow, which was reaching a 4-month high on Monday, is off more than 550 points during the past 48 hours. The latest Fed’s minutes were partly blamed on the afternoon sell off. However, it should be noted that there is really nothing new in the minutes. The Fed basically indicated that their rate cut campaign was over following the latest cut on April 30th while traders were expecting no rate change long before today’s release. In addition, the Fed also lowered its forecast for economic growth and increased the estimation for inflation rate and unemployment rate. But those should also come as no surprise given recent economic development and rising commodity prices. A $4 rise in crude price may be the real reason behind today’s weakness.
All major sectors ended the day in red. Defensive sectors such as utilities and healthcare were outperforming on a relative basis. Financials and commodities were among noticeable losers. The latter faced some profit taking despite a new high in the CRB commodity index, which jumped almost 8 points led by energies. The US dollar continued to slide against most major currencies. Treasuries dropped as investors tried to assess the latest inflation forecast from the Fed. The VIX index jumped for the second day but at 18.59, it remained too low to trigger a typical “capitulation” rally. Indeed, the market may be stuck in a trading range for the foreseeable future.

The market continued its slump from yesterday afternoon with the Dow finishing the session down by 200 points. From yesterday’s intra-day high, the Dow has already given up 350 points in two days.  We got some mixed inflation news. The headline PPI came tamer than expected at 0.2%. Economists called for a rise of 0.4%. The core PPI, however, climbed more than expected, which brought the year-over-year increase to 3.0%. Another record high in crude price didn’t help matters either. 
Energies and utilities were among the few sectors that ended in the green territory. Financials were noticeably weak following Oppenheimer analysts comments about potential $170 billion more write-downs in major institutions. We should note however that financial institutions worldwide have already written off more than $360 billion assets since the sub-prime crisis started 10 months ago, which means that even by a rather pessimistic view(such as the one from Oppenheimer) the financial crisis is two-thirds over. Of course, the upcoming recovery won’t be a smoothly one. But the rigorous efforts taken by the Fed have greatly alleviated the tension in the capital market during the past two months. For instance, the TED, which is the spread between 3-month treasuries and 3-month LIBOR, reached 78 bps today - the lowest level since last August, indicating banks are more willing to lend to each other. Back in March, the spread was at a level of more than 200 bps.  
The US dollar was lower against major currencies while commodities rallied across the board. Treasuries had a typical flight-to-quality day as money moved out of equity market. The VIX index, which is usually used as a fear indicator, jumped 3% and closed at 17.58. But at this level, it is still near a 10-month low, indicating continuing complacency in the market.  

The market closed the first session of the new week mixed. The Dow, up more than 150 points in early trading, finished the day up by 0.3% while the Nasdaq gave up 0.5% following more than 3% gain in the previous week. It is a very light week in terms of economic news. The Leading Indicators came at 0.1% vs. unchanged expected and marked the second consecutive month of growth. Based on current available data in May, we may see another positive reading. On the negative side, crude oil reversed early loss and closed at another record high. Interestingly, the Dow Transportation Average also hit a new historical high today. 
Basic materials and technologies saw some profit taking today while energies continued to hit new highs. Although some market sources cited comments from SanDisk CEO as the trigger for afternoon’s selloff, we should note that both basic materials and technologies have enjoyed a great run since March and a pullback or consolidation is actually healthy going forward. In addition, right before the selloff, all three major indices were above their 200-day moving average and the VIX was at a 10-month low, which showed wide-spread complacency among buyers. The CRB Commodity Index ended the session modestly lower. The US dollar was mixed against major currencies while treasuries erased early losses following afternoon’s selloff in equities.