Energy, Materials Rally But Credit Cards Face Capital Questions
Material and energy stocks got back some of their lost mojo today, despite a dollar rally. The big debate is how much of the commodity run up is due to supply/demand issues, and how much is due to the weak dollar (which of course stimulated demand for commodities). A lot of traders are trying to figure out that math right now.
This was the week we finally decisively broke the downtrend that began in October of 2007:
--We broke decisively about 1,400 in the S&P 500, where we had failed three times before;
--Charles Campbell at Miller Tabak noted that the Dow has finally retraced half its losses from its October high to the March low
--I would also note that the Dow is also finally above its 200 day moving average for the first time since December.
For the week: Dow up 1.1 percent, S&P 500 up 1 percent, NASDAQ up 2 percent (techs really shined).
Next week: April retail sales. Remember Easter was in March this year, in April last year, so the comps will be tougher. Everyone is hopeful the rebate checks will make a big difference in retail sales for May.
Credit card issuers Visa and Mastercardwere weak today. The Fed joined other bank regulators by backing more limits on billing practices of credit card companies. For example, they would bar them from increasing interest rates on existing balances.
This is certainly fair for consumers, but is bad for credit card companies and payment systems if it becomes a real political issue. The broader message is more important: more federal regulation of the financial services industry is coming.
There's a pretty clear trend in that direction. There was a lot of talk today about Congressional hearings looking into requiring firms to raise more capital, for instance.
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