Thread,
"Shorts Got Sqeezed"!!!
Closing Stock Market Commentary
brought to you by Larry Wachtel.
This commentary, edited for use on the Internet, is broadcast on New York radio (station WINS, 1010 AM). Please note that securities mentioned within this commentary should not be considered as recommendations and are for informational purposes only.
November 13, 1997, 5:24 p.m. EST
DJIA 7487.76 +86.44
Go figure. Here we were today beset by a sea of troubles, and the Blue Chips perversely take off to the upside. Part of the explanation lies in the Chicago pits where shorts got squeezed. Part could be an old fashioned oversold condition. And there is also the silver lining spin, namely that the slowdown in certain portions of the globe will serve to temper a budding economic blow-off domestically and keep the Fed in even keel condition.
At any rate, when the smoke had cleared the Dow Jones Industrial Average was up 86 points with advances and declines at even keel. NASDAQ jumped over 15 points as high tech returned from the nether regions, while big-board volume expanded to 648 million shares.
Wall Street began the day with a plus, namely the Asian markets had stabilized over night instead of following New York to the downside. During the session, the street had to follow the testimony of Fed
chief Alan Greenspan who told a house committee about Southeast Asian problems while also keeping a watchful eye on the worsening Iraqi situation. With the monitoring team leaving Iraq, there is the growing chance of a military response from the United Nations.
Bonds erased gains as stocks rebounded, making the safety of Treasurys less alluring to investors. The benchmark 30-year bond yield rose fractionally, leaving it unchanged at 65.10%. In testimony today before the house banking committee, Federal Reserve Chairman Alan Greenspan said the turmoil in Asia does not yet pose a threat to the U.S. economy, though it might cut corporate profits. He added that the troubles in Asia reduce the danger that U.S. inflation will accelerate, and said the events there were a factor in the Fed's decision to leave interest rates unchanged at a policy meeting yesterday.
Business productivity accelerated in the third quarter at the fastest pace in almost five years as the U.S. economy operated at full blast and inflation remained in check. Non-farm productivity rose at a larger-than-expected 4.5% annual rate in the quarter ending September 30th - the biggest gain since the fourth quarter of 1992.
And the money keeps rolling in, estimated new net flows to U.S. stock mutual funds were 21 billion in October, down from September inflows of 25.8 billion. Of course, the final week of Octobe witnessed the big crash and the big rebound.
Tomorrow will be colored by Asian markets, by numbers on producer prices, retail sales and by wet and wild volatility. There is no room for complacency on the street of dreams.
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Ibexx |
