He added: "You had two days up in a row. You’re entitled to a pull back, and Friday is the best day for that. (Stocks) are a little ahead of themselves.”
Cashin said traders were cheered early in the day by the Chinese rate cut, but began to question whether it means the data scheduled to be released this weekend will be particularly weak. The Chinese economic data include industrial production, retail sales, and inflation data, all expected on Saturday.
As for Europe, Reuters reports euro zone officials and finance ministers will discuss how to support Spain in a Saturday morning conference call. There will then be a later call between euro zone finance ministers.
Earlier reports Friday said Spain was to ask for a bank bailout Saturday, but the Spanish government stated that it would wait to see the outcome of the International Monetary Fund and two outside companies survey of the banking sector's needs.
“I think investors are going to square positions over the weekend,” said Jack Ablin, chief investment officer of Harris Private Bank, saying he’s positive on stocks, but he does not believe the run this week is the start of a big bull run.
Investors, however, are too pessimistic.
“I think theU.S. investor is selling the U.S. economy short. I think there’s still positive stuff going on. The new orders over inventories are as wide as I’ve seen. Manufacturing resurgence is strong. The problem is you could still see ISM go through the roof, and there’s still no jobs,” he said.
U.S. Federal Reserve Chairman Ben Bernanke kept the status quo when he testified before Congress Thursday. He offered no new clues on whether the Fed will ease and said it had tools at its disposal if it needs to use them.
“I think what Chairman Bernanke told us today is you really have to keep an eye on what’s going on in Europe. If Europe deteriorates from here, the Fed would take out some more insurance and begin easing,” said Brian Edmonds, head of interest rate trading at Cantor Fitzgerald.
In the coming week, investors are watching for news on key elections. The primary concern is Greece's June 17 election, where anti-bailout leftists are in tight race with the New Democracy party.
“I think one interesting thing is you have the French elections over the weekend — and the big China data dump,” said Brown Brothers currency strategist Mark McCormick. The elections could give French President Francois Hollande more support if leftists gain seats in the Parliamentary election, as expected. The voting takes place Sunday and then again next week.
McCormick saidChina could be pre-emptingweak data with the rate cut.
“It’s probably going to be a bit soft given the slowdown in other data we’ve seen recently,” he said. China purchasing manager’s data showed the economy was slowing last month. The HSBC PMI fell to 48.4 from 49.3 in April. That tracks small and medium sized businesses, and any number under 50 indicates contraction.
The Chinese rate cut follows a cut by the Reserve Bank of Australia this week. Miller Tabak market strategist Peter Boockvar said central bankers in Thailand, Indonesia and Philippines meet next week, while India meets the following Monday, so there could be further central bank actions in the next several days. Korea on Friday left rates unchanged.
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