The Fed and the start of earnings season are two big focuses for stocks Tuesday, after Monday's dullish session.
The Fed releases minutes of its September 18 meeting and its August 16 call at 2p ET. This time last week, traders would have been digging into those minutes to find any confirmation of their view that rates will be cut again at the Fed's October 31 meeting.
But Friday's jobs report changed that, and the idea of a rate cut is now a toss-up. The better-than-expected jobs data and positive revisions to Augusts' negative number was a signal the economy is holding up, and perhaps the Fed can put off another cut after its half-point jolt in September
The other big event of the day comes after the bell when Dow component Alcoa reports third-quarter earnings. Alcoa is always the first of the Dow 30 to report, marking the start of the quarterly earnings season.
The stock market was quiet Monday, trading in a tight range on the Columbus Day holiday. The Dow was off 22 at 14,043; the S&P finished down 5 at 1552, but the Nasdaq had an up day, rising seven to 2787. Google, a Nasdaq stock, crossed the $600 mark for the first time, rising 2.6% to $609 per share.
The bond market was closed for Columbus Day.
Monday was an up day for the dollar, and a down day for commodities.
Oil lost a dramatic 2.7%, or $2.20 per barrel to $79.02.
John Kilduff, senior vice president at MF Global, said he expects oil to continue to decline into his target range of $74 to $76 per barrel. "The persistently low refining utilization rate is not making for a big demand for crude," he said.
"I think the dollar stabilization is key," said Kilduff, a CNBC contributor. As the dollar has wilted, oil ran up, hitting a new of $84.10 per barrel in September.
Kilduff also said the unseasonably warm weather in the U.S. could be a factor. "If you were going to get into a cold snap now, you'd get a little bit of an (upward) effect," he said.
There's a buzz of fear surrounding stocks these days. Was that run too good to be true? The worried undercurrent got a bit louder Monday. There's a fear of putting too much money in -- and a near equal fear about taking money out.
Laszlo Birinyi of Birinyi Associates issued a note saying he expects "a slowing if not cessation of the rally near term." The reason is technical and a little complicated, but basically, the theory is if the S&P 500 is 5% above its 50-day average, then the market is overbought.
At a level of 1556, the S&P would be at that level. The S&P was at that level yesterday, before falling five to 1552.
Birinyi says the indicator doesn't mean there's automatically a collapse coming in stocks. He says it acts more like a traffic light on Manhattan's Fifth Avenue. "You can cross but you better look both ways and be real careful," he wrote.
He points to the fact that the 5% move up in stocks in 50 days is double the normal historical return of 8-10% in a year, or 200 trading days. The story is even worse, he notes, when you look at the performance of sectors. Financials, health care, industrials, materials and consumer staples are "as extended (vs. their 50-day moving average) as they have been at any point over the last eighteen months."
It is also not comforting that he says only three sectors were at their peak in July, when the market was 3% from the top.
But perhaps one of his biggest warnings is that this trend is liquidity-driven, not fundamental. That's kind of like throwing money at stocks because they're there and you have to spend -- not because you believe in what you are buying.
Loving the Euro
As European finance ministers hold two days of meetings, there's talk that they'll develop a unified position on the weak U.S. dollar ahead of the G-7 meeting later in the month
However, German Finance Minister Peer Steinbrueck says he likes a strong euro. (Swap out "euro" for "dollar" and he would sound like a U.S. Treasury secretary.)
"I prefer a strong euro," he told reporters. Reuters reported that he also laughed. "I love cash and a strong euro."
France and Italy, though, don't quite see things the same way and they have led the call for action to stem the dollar's decline.
Deal rumoring is creeping back into the stock market, though it's way nowhere near the level of early summer, when every company was whispered to be a possible target of private equity. CNBC's Scott Wapner said rumors these days are "very stock specific," and he reported that one stock, Business Objects, was running up last week on rumors that it was a takeover target.
Well guess what?
It's in a deal with SAP.