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The market advanced for the second day in a row. The Nasdaq again became the top performer among the big three and posted a 1% gain. We got some mixed economic news: On the positive side, weekly jobless claims unexpectedly dropped 33K from the previous week while economists expected no change. In addition, the continuing claims also dropped 65K from the previous week and came at 2.934 million. In a separate report, orders for durable goods excluding transportation rose a greater-than-expected 1.5% in March while the headline number of negative 0.3% was slightly below consensus. On the flip side, the New Home sales for March plunged 8.5% to 526K, the lowest in 17 years. Meanwhile, the most pessimistic economist called for a drop to 560K. The median price dropped 13.3% year-over-year, the most in almost four decades. But generally positive earnings results along with strength in the US dollar provided much support to today’s rally.
There was clearly some sector rotation ongoing in today’s market. Money was moving out of previously hot commodities and piling into mostly abandoned financials. The CRB commodity index dropped 1.7% while the US dollar enjoyed its best day against the euro since last December. Treasuries were sold off sharply across the yield curve as traders trimmed their bets for the interest rate cut next week. Currently they bet with 80% chance of a quarter cut with the balance calling for no cut. After the bell, Microsoft issued a cautious guidance for the next quarter while American Express handily beat expectations.
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