Why Stocks Had A Modest Rally Today
Several factors helped stocks stage a modest rally today:
1) lower oil and commodity prices (including gold and copper);
2) a sense that certain groups--particularly financials--have been oversold.
The last point was the major factor in a modest late day rally. Many traders noted that:
--financials as a group are down 7 percent this month;
--Goldman Sachs is down 9 days in a row (down 9 percent for the month), Lehman is down 16 percent this month, and Morgan Stanley is down 13 percent.
--negative research on brokers continues, with Bank of Americaand Bernstein lowering numbers today on Lehman, Goldman, and Morgan Stanley.
Techs--which many have been hoping would feel the leadership gap--advanced modestly today, with 2 to 3 percent gains in the Big Momentum names like Google, Apple,RIM, and Bidu.
Overall, 3 stocks advanced for every 2 that declined. OK, it's not a roaring start to the summer, but consider the headlines:
1) May Conference Board Consumer Confidence fell to the lowest since October 1992;
2) April New Home Sales, while slightly better than expected, are still hovering around the lowest levels since 1991;
3) the S&P/Case Shiller report of home price indices was down 14.1 percent in the first quarter compared to the first quarter last year; that's the biggest decline in the history of the index.
If there's any good news, it was that the housing numbers--dismal as they were--were about in line with expectations.
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