US markets will take solace in the reappointment of Fed Chairman Ben Bernanke Tuesday.
President Barack Obama plans to reinstate the Fed chief in an early-morning announcement, breaking from his Martha's Vineyard vacation.
The reappointment of Bernanke had been expected, though it also had been seen as a much-needed endorsement of the one regulator who has the most credibility on Wall Street.
Bernanke's performance since the onset of the financial crisis has been mostly praised by economists, though he did face critics who said the Fed was too slow to act, that it allowed the crisis to happen in the first place and that it has too much power.
Home prices and consumer confidence are on the menu Tuesday.
Stocks Monday started the day higher, but ended the session mixed and virtually unchanged. The Dow was up 3 at 9509, and the S&P 500 was down 0.56 at 1025.57. Treasurys saw buyers along the curve, and the dollar was higher. Oil continued its move higher, finishing at $74.37 per barrel, on a slight gain of $0.48. The S&P energy sector was the best performer, up 1.3 percent.
"The market could have a 3 percent move either way over the next several days, but who knows. I don't think it matters," said Tim Smalls of Execution LLC said Monday afternoon. "I don't think anything is fundamentally going to change in this environment until after Labor Day."
Tuesday's focus will be the S&P/Case-Shiller home price index, issued at 9 a.m. and consumer confidence, released at 10 a.m. Investors are also watching the Treasury's auction of $42 billion 2-year notes at 1 p.m. The auction is the first of three this week, for a total of $109 billion in 2-, 5- and 7-year notes.
"It should be a little challenging, given the rally we just had," said Rick Klingman of BNP Paribas said Monday.
In the late afternoon Monday, the 10-year was yielding 3.494 percent, and the 2-year was at 1.024 percent. He said the 2-year will probably go more smoothly than the 5-year and 7-year auctions.
Smalls said the lack of players in the stock market will keep things quiet.
"Everything's going to be muted until everyone gets back," he said. "I think September is going to be very volatile. I think the reality of the situation is as long as the economy continues to make some strides I think we'll be OK."
Traders Monday were watching unusual trading activity in several financial stocks, Fannie Mae , Freddie Mac and Citigroup . All three were up on heavy volume and accounted for about 21 percent of the total NYSE volume. Some traders attributed the moves to a momentum trade. Fannie was more than 40 percent higher, while Freddie was more than 18 percent higher.
Robert Doll, vice chairman of BlackRock, was at CNBC to host "Squawk Box" Monday. He, like many watching stocks, sees volatility ahead in the fall months. He has a target of 1050 to 1100 for the year end on the S&P 500, and he is retaining that target.
"We think between here and the end of the year — at some point — we'll get a bump. I don't know what the cause will be. Perhaps it will be that economic growth isn't as strong as we thought or we're concerned about how it slows down in 2010. But investors will find an excuse, we think, to sell them off before they come on again at the end of the year," he said in an interview after the program.
Doll also said that there is plenty of sidelined money, waiting for an opportunity to flow back into the market.
"September, October is often a seasonally weaker period, and that's often because people come back from vacation, focus on next year and start to say 'maybe it's not as good as I thought it was going to be,' and we have an excuse for a sell off. After the big run, again concerns about less abundant growth could be the reason for that so I would not disagree with that timing as a possibility," he said.
Oil pumped higher to another year high, as the anniversary of the first successful oil well approaches. On Friday, it will be 150 years since Edwin Laurentine Drake first successfully drilled for oil in Titusville, Pa. (yes Pennsylvania, not Texas)
"When they finally hit oil on the 28th of August, the very next day Col. Drake received a letter from his investors telling him to wind up the enterprise because they ran out of money. This anniversary comes at a very important time, when there's more debate than ever before about the future of oil and what role it will play in our economy in the coming years," said Daniel Yergin, chairman of IHS CERA.
Yergin, who is also CNBC's global energy analyst, also said the current oil price reflects "exuberance."
"When you look at old fashioned supply and demand, it's still not there," he said. "Oil has two different natures to its character...It's almost like a split personality. The supply and demand side doesn't matter right now. It's the financial instrument side which matters."
Longer term, "I think oil demand will grow for another 20 or 30 years. I think it will decline in the United States, but it will grow in Asia just because of the population and rising incomes," he said.
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