After Tuesday's choppy selloff, stocks were higher Wednesday on positive headlines about Greek debt talks and as trading in the dollar and Treasurys was more subdued. The Nasdaq jumped 1.5 percent to a new high of 5,092, while the Dow gained 0.7 percent to 18,162 and the S&P 500 rose 0.9 percent to 2,123.
"You had a dangerous cocktail (Tuesday) of slightly hawkish Fed doves, in the form of (Fed Chair Janet) Yellen and (Fed Vice Chairman Stanley) Fischer, positive economic data and everyone was talking about what if the Fed hikes rates … the kneejerk reaction was that's going to be bad," Hogan said.
Yellen spoke Friday but her comments that the Fed could hike rates this year if the economy is strong enough continued to resonate this week. Even though it wasn't a new message from the Fed, some traders viewed the timing and the fact that it came from Yellen as important. Fischer followed her Tuesday, with similar comments.
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The dollar index was lower late Wednesday, as the euro crept higher, but the dollar was higher against the yen, which briefly crossed the 124 level for the first time since June 2007.
Yields were slightly higher on the short end of the Treasury curve, but on the long end, yields slipped. The 10-year was at 2.12 in late trading.
Unlike Tuesday, there was no economic data for traders to focus on, so European headlines dominated early trading. "We had basically two different trading sessions. We had the morning price action, where we drifted aimlessly higher in yields in a bear flattening. Then we had a twisting of the curve after the 5-year auction, which went quite well. Into rising yields, the market was willing to take down supply at a premium. That's kind of indicative that rates may have found a footing, at least for now," said Tyler Tucci, short-term markets and interest rates derivatives strategist at RBS.
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Tucci said Thursday's 1 p.m. ET $24 billion, 7-year auction should also go well, based on the 5-year.
Besides the data, there are several Fed speakers, including San Francisco Fed President John Williams at 2:30 a.m. ET, speaking on banking supervision in Singapore, and Minneapolis Fed President Narayana Kocherlakota speaking at 2:45 p.m. on monetary policy.
Europe will remain in the headlines as traders watch for developments related to Greece's debt talks and the G-7 meets in Dresden, Germany.
There are a number of earnings reports including Canadian banks - Royal Bank of Canada, Toronto Dominion, and Canadian Imperial Bank. Abercrombie and Fitch, Express, Flowers Foods, Seadrill Ltd, Sanderson Farms, and Signet Jewelers also report ahead of the open. GameStop, Splunk, Avago, Ulta Salon and Decker's Outdoors report after the closing bell.
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