Stocks seem locked in a trading band of indecision, as traders await the next development from the Middle East or economic news that could move the market forward.
Thursday's trading could be much the same, and the early focus will be on weekly jobless claims. Traders are watching to see if weekly jobless claims at 8:30 a.m. can stay under 400,000 for a third week in a row, a positive sign for employment. There is also international trade data at 8:30 a.m., and the Bank of England holds a rates meeting, which is not expected to result in a change.
Wednesday, the second anniversary of the market bottom of 2009, was marked by 1 point declines in both the Dow and the S&P 500, which finished at 1320. Nasdaq, home to tech, dropped 14 points to 2751. The S&P is up about 95 percent since it fell to 676 two years ago this week.
Wednesday's session saw stock traders aggressively take profits from energy and materials-related stocks, as oil prices slipped by $0.64 to $104.38 and copper skidded by nearly 3 percent to an 11-week low. But the safety trade in silver and gold continued to shine, with gold edging up $2.40 to $1429.60 per ounce, and silver rising 1.1 percent to $36.05 an ounce.
"I'm just jockeying for position to figure out what the next big move is, and that kind of defines the overall feeling of investors," said Oppenheimer Asset Management Chief Investment Strategist Brian Belski.
Belski said from his talks with institutional investors, it's clear that most were not positioned for the market's current volatility. "What that means is people in their portfolios were chasing up assets that were working, not really looking forward," he said.
Now, in a period of uncertainty, investors are starting to do what they think is playing it safe, he said. "People get nervous. They tend to regress and hug the indexes a little bit. We think that's the wrong strategy. We think we've entered a period of active investing. You don't want to be in ETFs. You want to make your bets and stick with them. We think it's more about stocks than being in the right asset," said Belski.
Belski, unlike many strategists, believes the market may have seen its highs for the year. "I maintained my bullish stance all of last year. We just had the two year anniversary of the stock market bottom, and now everybody's bullish?" he said.
Unless the economy or earnings begin to show accelerated gains, Belski believes they are already factored into the price of stocks. "We need dramatic job growth and earnings growth to se the stock market go much higher form here," he said. Stocks he likes now include more domestically focused industrials and tech.
"It's the calm before the storm. Come April 1, it will be a new quarter and you have first quarter earnings. We're in a period right now where not a lot is going on, but a lot is going on," said Belski.
Traders are also watching the first day of trading in HCA Holdings Thursday, after the hospital chain's shares were snapped up in an oversubscribed public offering of 126.2 million shares at $30 a share. The $3.5 billion deal is the largest for a U.S. company taken private by private equity firms.
The bond marketwill also be a focus as the Treasury auctions $13 billion of reopened 30-year bonds at 1 p.m. The auction of $21 billion in 10-year notes Wednesday was better bid than expected by traders. The auction came as reports circulated that Pimco's Total Return Fund eliminated Treasury holdings though traders expect the fund may still hold some Treasury instruments, like bills. Pimco co-chief investment officer Bill Gross has not been shy about discussing his concerns about Treasurys because of U.S. government spending and deficits, so traders were not surprised.
Rick Klingman, managing director of Treasury trading at BNP Paribas, said the 30-year auction is not likely to find the buying interest that the 10-year did. "I haven't seen any big demand for the back end of the market from the big players out there, mutual funds and insurance companies, lately. I would think it's going to be more of an average auction," he said.
Besides the auctions, "we're watching equities and oil and that's really going to be it for tomorrow," he said.
What Else to Watch
The House Government Oversight committee will be holding a hearing on the operations of the SEC, and how it has handled investigations such as the Madoff case. SEC Chair Mary Schapiro testifies at the 1:30 p.m. hearing. The Senate Banking securities subcommittee also talks to Schapiro earlier in the day on her agency's budget.
The Senate Health, Education, Labor and Pensions Committee holds a 10 a.m. hearing on for profit colleges and plans to spotlight Bridgepoint Education.
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