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Weekly Recap - Week ending 29-May-09The major averages finished higher on this holiday-shortened week -- S&P 500 +3.6%, Dow +2.7%, Nasdaq Comp +4.9%, Russell 2000 +5.0%. It was an extremely light week in terms of news flow and volume, with the biggest volatility due to gyrations in the bond market on Wednesday and Thursday.

Given the lack of news in the early going on Tuesday, investors looked to a much better-than-expected May Consumer Confidence reading of 54.9 (consensus 42.6) for guidance. It gave them more anecdotal evidence that economic conditions may be improving, and led to a 2.6% advance in the S&P.

The market looked to hold those gains on Wednesday, and did through morning and midday trade. But around 13:30ET bond yields began surging higher, which led to an aggressive sell-off in the stock market. The S&P ended down 1.9%.

The surge in yields occurred approximately 30 minutes after a successful 5-year notes offering. Though the auction itself was solid, mortgage origination sellers moved to hedge their positions and pressured the long-end of the yield curve. That sent the benchmark 10-year note more than one point lower, which pushed its yield above 3.70% to a fresh 2009 high. The higher borrowing costs associated with higher yields undermine the government's efforts to keep rates down in order to help along an economic recovery.

Treasury auctions remained on investors' minds on Thursday. After seeking direction in morning trade, the stock market managed to regain some of the prior day's declines after a successful 7-year notes offering that contained no surprises. The S&P ended 1.5% higher on the day.

There was some mixed economic data that morning worth mentioning.
http://finance.yahoo.com/marketupdate?u