The S&P traded pretty nicely today at first glance and even managed to print a 2% gain. The news of the day did take its toll on investors though as the conviction was anemic at best. Take a look at the breadth of the NYSE today and you’ll see what I’m talking about. The ADP jobs data was far worse than expected with a loss of 250K jobs compared to an expected 200K loss. We then got a poor ISM reading of 37.3% for non-manufacturing sectors of the economy. In all, 17 of the 18 industries indicated contraction which suggests we are in for a long haul back above 50%.
The Fed came out with its Beige Book (to match the blue faced investor) and it pretty much summed up what everyone knows at this point—we’re in a recession. The report stated that “Economic activity weakened across all Federal Reserve districts.” Retailers are preparing for a “relatively slow holiday season” and the consumer is looking for bargains. Lastly, “manufacturing activity declined noticeably” since the last beige book report came out.
A few bullish items out there today were the announcement that the Fed is considering lowering mortgage rates to as low as 4.5%. This news came on the same day that data pointed to a surge in mortgage refinancing. Another news item that hit the wires was Bill Miller’s (no relation) statement that t “looks as if the bottom has been made” in U.S. stocks. He hedged his statement by also mentioning that the Fed needs to step up and start buying stocks and bonds. He also mentioned that the credit markets must get back on their feet before we will see a rally.
Tomorrow we get the weekly jobless claims, factory orders, natural gas inventories, and some Fed speak from Bernanke, Fisher, and Kroszner. NOVL is the sole S&P 500 company reporting earnings tomorrow.