Markets are already looking ahead to Friday's March jobs report as the next directional driver.
Stocks Tuesday floated higher in thin volume trading, with the biggest gainers the telecom and energy sectors. The Dow was up 81 at 12,278 and the S&P 500 was 9 points higher at 1319.
The dollar was also higher and bond prices were depressed, in part on comments from hawkish Fed officials that suggested the Fed should end its easy money policies sooner rather than later.
"It all comes down to Friday and the non-farm payrolls," said Boris Schlossberg of GFT Forex. "What if it comes in at 120,000, or 130,000, and unemployment goes back up to 9 percent? There's going to be a tremendous amount of resistance on the part of the FOMC to give it up." Economists expect about 200,000 jobs for March.
Dollar-yen was also higher Tuesday, surpassing the levels it hit after G-7 central banks intervened against the yen March 18.
"Since Plosser and Bullard, we have had 150 point rally. You can call this the second intervention — the Plosser-Bullard intervention," said Schlossberg. He was referring to Friday's comments from Philadelphia Fed president Charles Plosser and St. Louis Fed President James Bullard's comments, made today and over the weekend.
For Wednesday, investors are watching the ADP private sector payroll report for signals about Friday's jobs report. It is released at 8:15 a.m. The Challenger jobs report is released at 7:30 a.m. There is also another Treasury auction at 1 p.m. of $29 billion in 7-year notes. Wednesday's Fed speakers include Bullard, who is in London, and Kansas City Fed President Thomas Hoenig, who also speaks in London before the New York market open.
While bonds saw selling, stocks rose with little explanation Tuesday. Traders in the stock market dismissed comments from Bullard that the Fed could cut short its quantitative easing program. But the stock market has also ignored more trouble for banks in Europe and Japan's problems with its leaking nuclear power plant.
Another potential negative for stocks was the consumer confidence report but the market moved past it. As gasoline prices rose, consumer confidence fell to a weaker than expected 63.4 in March, after hitting a three-year high of 72 in February.
"Black swans are swimming in flocks now," quipped Jack Ablin, chief investment officer at Harris Private Bank. Traders have expected stocks to move higher into the end of the quarter Thursday, as portfolio managers shuffle holdings.
"One of the metrics we use is cash on the sidelines, and it's still nearly 25 percent of the capitalization of the stock market that's sitting on the sidelines in cash...that could be filtering in. Every day this goes on, it might be convincing these retail investors to be in there," said Ablin.
"Everyone's bemoaning the large government involvement, but that's what's keeping this going," he said. "We're getting pretty cautious here."
Earnings reports are expected Wednesday from Family Dollar and Signet Jewelers . Mosaic reports after the closing bell.
In Washington, the House Financial Services' Oversight and Government Reform subcommittee meets on TARP. The Senate Appropriations Energy and Water subcommittee holds a hearing on nuclear safety.
The Senate Committee on Agriculture, Nutrition and Forestry meets on high gasoline prices, and the House Financial Services Oversight and Investigations subcommittee meets on the cost of implementing Dodd Frank
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