The Closing Look

Stock Market Commentary:

U.S. stocks rallied on Tuesday as traders returned from a long weekend. Wall Street was closed on Monday but stock futures were higher alongside other international equity markets. Stocks continued to bounce on Tuesday from deeply oversold levels. International stocks were higher after the latest round of bullish central bank rhetoric was announced. Mario Draghi, head of the European Central Bank (ECB), said he is ”ready to do its part” to make “the euro area more resilient.” That is his way of saying the ECB is ready to pump more money into the system (increase QE) next month if conditions worsen. Separately, China’s Central Bank wants to spend more money to stimulate their economy and they central bank is considering changing the rules (once again) to help “encourage” bank lending. Bad loans in China surged to the highest level in a decade but the central bank wants more lending to stimulate markets. The Yuan surged on Monday and enjoyed its largest single day gain in over 10 years. In the U.S. a few regional Fed presidents spoke and said largely reiterated the recent stance that the Fed remains data dependent. Oil prices were higher on Monday but fell on Tuesday after OPEC decided to hold production steady. The Street was looking for OPEC to cut production and the fact that oil didn’t cut sent oil prices plunging over 8% from its intra-day on Tuesday.Oil has only had 2 “up” days all month and remains in a steep bear market. In economic news, the U.S. Empire Manufacturing Index contracted for a seventh straight month and missed estimates. The Empire Manufacturing index fell to 16.64, missing estimates for -10. In other news, home builder sentiment fell to 58 in February, missing estimates for 61.

Gary’s Thoughts: Everything headed south but markets headed up past 2 days. Enjoy while it lasts.