By the end of Wall Street trading, U.S. stocks stabilized , well off their lows. The S&P 500, down nearly one, was still just three points away from its closing high, and the Dow was off just 33 points at 14,526. Treasurys, impacted by quarter-end buying, moved higher and yields fell. The 10-year was yielding 1.84, off its overnight high of 1.92 percent.
The Dow is up about 10.9 percent for the first quarter, its best first quarter performance since the 11.3 percent gain in 1998. The Dow Transports jumped more than 16 percent, setting up for the best quarterly gain since 1991. The S&P 500 was up 9.6 percent, and the Nasdaq was up 7.9 percent. The S&P health care sector outperformed with a 14 percent gain, followed by consumer staples, up 13 percent. Materials and tech were the laggards, each up just over three percent.
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Treasurys close early, at 1 p.m. Thursday, ahead of the Good Friday holiday when markets will be closed. The government auctions $29 billion in 7-year notes at 11:30 a.m. ET.
"If you could tell me what headlines come out of Cyprus or Malta or Slovenia or Italy, then I could probably make a good guess on the market, but failing that…we're probably going to be here for a while at these (yield) levels," said Harvey Goldsmith, Cantor Fitzgerald Treasury strategist.
Steve Massocca of Wedbush Securities said the stock market stabilized after Wednesday's morning selloff because Cyprus is not the threat for markets that problems another country would be. With an oversized banking system, tiny Cyprus restructured its failing banks, closing one, so it could qualify for a 10 billion euro bailout. The country extracted funds from uninsured depositors but also imposed strict capital controls, out of concern about runs on its banks.
"The world's going to move on," said Massocca. "It was not a situation where the European Central Bank had to 'do whatever it takes' so they didn't. If this happened in Spain or Italy, it's going to be an entirely different response."
Massocca said it would not be surprising to see the market start to sell off in the second quarter. "It's clearly a seasonal slowdown that happens. Most of the gains take place in the period prior to May, and it's happening again this year. Whether we get a significant decline, I don't know, but I think as we go into summer, things will feel heavier," he said.
The risks for stocks include weaker earnings, or a more serious flare up in Europe.
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