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The market closed mixed for the day. For the week, all three major indices posted a loss of around 4%, erasing more than two thirds of the gains from the past two weeks. Interestingly, sectors showed quite distinct results for this Friday, which had little economic news. Tech and commodity stocks were big winners. As for the former, some may attribute today’s gain to Amazon’s share buyback news. I’m not too sure whether the 1 Billion dollar amount would have that big impact for the market. Instead, I think being the first major index that has re-tested the January’s lows during the past two days, Nasdaq deserves a rebound anyway. Commodity stocks, on the other hand, moved much higher due to higher commodity prices across the sector. The CRB commodity index hit another record high today. It feels more and more like 70s again – i.e., this round of commodity increase is more likely to be supply-side led rather than demand-side led. And if that is indeed the case, the Fed may start to think about when they should increase interest rates to prevent inflation from losing control.
On the downside, the leaders during the last two weeks’ rally (reading as Financials, Home Builders and Retailers) were under severe selling pressure throughout the session. Unless those sectors can pick up quickly, I believe there is a good chance that the market is going to re-test the previous lows. As for next week, which is a option expiry week, we are going to get several important economic news (Retail Sales on Wed, Initial Claims on Thu, Industrial Production on Fri) and the Fed Chairman Bernanke is going to testify before Senate Committee on Thursday. Somehow, it feels like January is coming again.
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