Courtesy of John Nyaradi.
Yesterday’s big rally flames out as Dr. Bernanke continues his media tour
Yesterday’s rally ran into stiff resistance today, even as Dr. Bernanke continued his rounds on the media hustings.
Showing particular weakness in the last 45 minutes of trading, the S&P 500 (NYSEARCA:SPY) faded to close at 1412, down 0.3% on the day.
Other major indexes were mixed with the Russell 2000 Index (NYSEARCA:IWM) shedding 0.7% while the Nasdaq 100 (NYSEARCA:QQQ) added 0.15% on the strength of the ongoing levitation event in Apple Computer (AAPL) up 1.2% to $614 and now up nearly 50% year to date.
Apple, the world’s most valuable company by market cap, now accounts for almost 5% of S&P earnings and without including it, earnings growth is in decline for the latest quarter.
Energy sector (NYSEARCA:IYE) was a sharp decliner, down 1.1% on poor consumer confidence and housing reports and the Financial Sector (NYSEARCA:IYF) dropped 0.8%.
Economic reports indicated further weakness in the housing sector with the Case Shiller report revealing home prices fell 0.8% in January, the fifth straight monthly drop to the lowest level in nine years. Of course this is bad news for the economy as the building sector is a vital part of the economy and home equity represents a major portion of most peoples’ assets.
Consumer confidence declined on employment concerns and rising gas prices, and so the two reports served to drag the markets slightly lower today.
Dr. Bernanke was out and about, recording an interview with ABC News in which he said more easing was a possibility and that he was sleeping better, as the overall picture, in his opinion, was improving but not as fast as he would like. So, unlike yesterday’s rally on a Bernanke speech, markets shrugged off the news as no news.
Finally, major media outlets reported that Providence, Rhode Island, the state’s capital, will very likely be taking a trip to bankruptcy court.
Bottom line: Economic data points at home and abroad continue to weaken in spite of the best efforts of Dr. Bernanke to kick start the economy into a higher gear after the “Great Recession.” On a technical basis, equity markets continue to weaken near significant resistance levels and on declining breadth and momentum.
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