Market Update
Close: Finally, the market found a catalyst to help preserve the historical outperformance native to November, perhaps setting the market up for a third consecutive week of gains. Strangely, however, the broad-based rally that closed eight of ten sectors higher was ignited by...
a strong bond auction? At 1:00 ET, the Treasury Dept. sold $13 bln in 10-year notes at a yield of 4.578% and, when indirect bidder participation (i.e. foreign central banks) checked in at a whopping 55.6% - more than twice this year's average of 25% - the 10-year (+18/32) continued to climb, eventually closing the yield at 4.56%. Since high interest rates have continued to be a restraint on the boost that better than expected corporate profits have awarded roughly two-thirds of the S&P 500, the pullback in borrowing costs spurred widespread buying efforts. To wit, the rate-sensitive Financial sector acted as the strongest source of support, as the AMEX Securities Broker/Dealer Index (XBD) closed at a new 52-week high. An afternoon turnaround in the influential Tech sector, which had served as the second largest drag on the market behind Energy, helped lift the Nasdaq into positive territory for good. Discouraging Q2 sales guidance from Cisco Systems (CSCO 17.15 -0.60) was eventually offset by strength in the semiconductor group, led by Intel's (INTC 25.24 +0.44) $25 bln buyback and 25% dividend increase, gains from leading software names and a late-day reversal in Dell (DELL 29.21 +0.19) ahead of its Q3 report. Health Care, Industrials, Consumer Discretionary, and Consumer Staples - in order of their influence on the S&P 500 - also gained at least 1.0% on the session. A 1.9% pullback in oil prices ($57.80/bbl -$1.13) was eventually embraced as more of a benefit, clearing...
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