Commodities Lead the Charge in Broad Based Rally
The dollar index spiked back near the unchanged line about an hour ago, which pulled select commodities lower including crude oil.
April crude oil has been in positive territory all session, but pulled back ~$1/barrel to new session lows of $101.93/barrel on the spike in the dollar index earlier. It’s now back above the $102 level, now up 1.1% at $102.16/barrel.
April natural gas fell quickly after pit trading opened, falling into negative territory and new session lows of $4.116/MMBtu. It’s erased over half of its losses and is now 0.8% higher at $4.20/MMBtu.
Precious metals have shown strength all morning. April gold is currently up 1% at $1430.3/ounce, while May silver is 2.4% higher at $35.91/ounce. Industrial commodity copper is the worst performer in the CRB Index, showing losses of 1.2% at $4.29/lb
A broad-based bid has driven the three major equity averages to gains in excess of 1% in the early going. The buying effort comes amid improved sentiment among market participants, who first began to show a willingness to return to riskier holdings late last week after they had reacted fearfully to headlines out of Japan and the Middle East and North Africa region… Just released, the U.S. Treasury announced that it will begin to wind down its $142 billion Mortgage-Backed Securities Portfolio. Starting this month, the Treasury plans to sell up to $10 billion in agency-guaranteed mortgage-backed securities per month, subject to conditions. The idea of increased debt supply in the market has stirred selling interest among Treasuries, such that the yield on the benchmark 10-year Note is now back to 3.30%. Dow +1.7%, S&P 500 +1.5%, Nasdaq +1.7%
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Market Internals This Morning
Sector Summary: S&P Consumer Discretionary Index +1.3%, modestly underperforming the broader market
The consumer discretionary group is slightly trailing the broader market in early trade. The retail group is higher with the Retail HOLDRS Trust (RTH) up 0.8%, the S&P Retail (RLX) up 1.1% and the SPDR S&P Retail ETF (XRT) up 1.2%. Trading on upside: Tiffany & Co (TIF +6.5%) beat by $0.05, reported revs in-line; guided Q1 EPS, revs above consensus; guided FY12 EPS, revs above consensus… Bed Bath & Beyond (BBBY +3.0%) upgraded to Mkt Perform at FBR Capital Trading on the downside:
Notable Mentions:
Select casino/gaming names are seeing early strength. Some names trading higher include: MPEL +3.1%, PNK +2.5%, LVS +2.5%,WYNN +1.8%, BYD +1.6%, PENN +1.5%.
Other notable mentions: Feihe Intl (ADY) missed by $0.03, beat on revs; guided FY11 above consensus… Leaders: Supervalu (SVU+3.3%) strength attributed to positive mention in financial newspaper… New York Times (NYT +2.7%) upgraded to Buy from Hold at Citigroup… Illinois Tool (ITW +1.4%) reported 3-month (Feb) revs +11%; guided Q1, FY11 EPS and rev, restates FY10 EPS slightly lower to account for change in fiscal year reporting format… Rentrak (RENT +1.2%) CEO purchases ~$280,000 of common stock in open market; his total is just under 1% of total shares outstanding. The co also announced a TV Essentials contract with Documentary Channel, the leading network dedicated exclusively to airing the works of independent documentary filmmakers… Lowe’s (LOW +0.5%) and Home Depot (HD +1.0%) initiated with Neutral ratings at Nomura… Laggards: Smithfield Foods (SFD -0.8%) and Sanderson Farms (SAFM +1.0%) downgraded to Neutral from Buy at Goldman…
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