This is a strange day: it's relatively quiet! The S&P 500 has moved in a mere 15-point range, until the last 20 minutes, when it has rallied to the highs of the day.
Traders are citing several reasons for the relatively stable trading range, at least up until midday:
--Libor rates coming down (12 straight days)
--The governments commercial paper program appears to be a success;
--The yen rally (a byproduct of the ending of the yen carry trade) appears to have stopped for the moment.
There are also a few mechanical events that may be making a difference. Some mutual funds, for example, end their fiscal year on October 31, and there is some speculation that funds will be taking losses to offset any capital gains.
- Durable Goods Orders Get Unexpected Boost of 0.8%
There is also some speculation regarding pension funds, which usually do monthly rebalancings to make sure they are within target ranges. Typically, many hedge funds maintain a ratio of 60 percent stocks, 40 percent bonds. But this month has seen such outsize losses (nearly 20 percent on the S&P 500) that there is speculation that a number of pension funds will be forced to buy stocks through the end of the month to maintain their targeted equity allocation.
This may have been a factor in yesterday's big move late in the day, and in today's 15-point move midday.
Word that GM and Cerberus may be closer to a deal with Chrysler is also helping stocks.
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