Retailers' April sales reports could shape early market action Thursday and provide a window on just how the consumer is faring.
Oil pressure continues to rise and is an increasing concern, as crude set yet another record on the NYMEX Wednesday. Oil finished the day at $123.53 per barrel, up $1.69 or 1.4 percent. Oil has risen nearly 10 percent in the last four days and is up 101 percent from a year ago.
Stocks got ripped Wednesday, falling the most since April 11. The Dow was off 206.48 or 1.6 percent to 12,814. The Nasdaq was down 44.82 or 1.7 percent, and the S&P 500 was off 1.8 percent at 1392.57.
Art Cashin, director of floor operations at UBS, said there were a confluence of factors hitting stocks. "You seem to have exhausted a bit at the top of the trading range. Yesterday's high was exactly the high from Friday, so it's kind of a minor double top so the combination made for a full bear stew," he said.
Concerns about the Countrywide deal reignited some worry about the financials, he said. Plus oil pumping to a new high pressured stocks, as did a late afternoon report on consumer credit which showed credit expanded by $15.3 billion in March, its highest rate in four months and well above the $5.5 billion expected.
"That's suggesting to me that I'm right, and people are taking their credit cards and buying milk and eggs and gas like never before," said Cashin.
There's just a few data points expected Thursday. Weekly jobless claims are reported at 8:30 a.m., and a number of 380,000 is expected. Wholesale inventories are reported at 10 a.m. and the consensus is for a rise of 0.6 percent. The European Central Bank and Bank of England have rate meetings in the morning but neither are expected to move on rates.
The Fed has its usual 4:30 p.m. announcement on discount window borrowing.
In earnings news, reports are expected from Deutsche Telekom, Toyota, Cablevision, Dynegy and Celgene. AIG reports after the bell.
Watch the 30-Year
CNBC's Rick Santelli says he's keeping a close eye on the long end of the Treasury curve, the 10-years and 30-years. He says its likely the 30-year will continue to sell off though Wednesday it was higher. He said there are a couple of key reasons for the trend. One is that hedges established during the credit crunch are being reduced.
"Also, the pricing pressure of commodities will give it inflationary premiums, and then there's competition from new investment grade corporate bonds, which are attracting investors with juicier yields," Santelli said.
"A lot of us believe that the distortion in the last year and a half with low interest rates is because the Treasury market in our country and elsewhere was the only hedge against derivatives," he said.
Today, buying in Treasurys pushed the yield on the 30-year lower to 4.60 percent. In Wednesday trading, the dollar fell 0.76 percent against the euro, to a level of $1.5406 per euro. The 10-year Treasury added 7/32, with its yield falling to 3.867 percent.
Obama Did It?
That's what CNBC's Larry Kudlow told me. Kudlow says he thinks much of the market's downward spiral Wednesday had to do with the belief that Illinois Sen. Barack Obama is now clearly the Democrat's candidate for the White House over New York Sen. Hillary Clinton.
"Last night's election was a game changer. The market wanted a 'Hill-Bama' death fight to the end. (That's Hillary and Obama blended) because they like McCain on taxes. This morning the Intrade market prediction showed Obama spikes up 54-38. Hillary spikes down," he said. The Intrade market also showed a clear Democrat majority in Congress. "It's a three house Democratic sweep. It's a nightmare. This is exactly what the market does not want," said Kudlow, who has never been known to hide his feelings.
I did ask Cashin if he found traders talking about the election Wednesday after the Indiana and North Carolina primaries Tuesday. He said there was not much chatter but he believes that it was a concern in the background. Traders, he said, were expecting a Clinton win early on and now they are beginning to focus on Obama and his tax plans. He said it was a small contributing factor in Wednesday's sell off.
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