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MARKET WRAP – STOCKS MAKE A COMEBACK

Stocks came off steep morning losses to finish essentially flat on the day.  The market ignored some bad news in the weaker than expected Empire State Manufacturing data (which came in at 19.1, well below estimates of 30) and traded in lock-step with the Euro all day as sovereign debt fears continue to roil the market.    News from abroad was equally negative.  Angela Merkel expressed some doubts regarding the effectiveness of the rescue package and the Bild Survey in Germany showed that 50% of citizens would prefer a return to the Deutsche Mark.  In addition, Germany is pushing for even harsher austerity measures in the region.  The news in China was no better as Chinese markets plummeted overnight.  Trade The News has the details:

“CHINA: Corporate profit worries in Europe reverberated in the Far East, as China Commerce Ministry acknowledged that the EU debt crisis may in fact slow global recovery, as export volume to US and Japan are already falling. Commerce Ministry also cited economic data suggesting the slow recovery in some Chinese markets is reflected by weak demand in major export markets. Elsewhere, deputy head of the macroeconomic research institute under the NDRC Chen Dongqi said China’s 2010 GDP may have peaked in Q1 at 11.9% and would fall to about 10% in Q2 to Q4. “

Copper prices finished the session lower by 5.5% on increased fears of a global slowdown.  All in all, it wasn’t a terrible session for the bulls who could have seen much steeper losses given the negative headlines.

From Daily Futures:

U.S. Economy
The New York Federal Reserve’s regional index of manufacturing fell from 31.86 to 19.11 in May, weaker than expected. The June 2011 eurodollars were up .01 at 98.785.

The U.S. Treasury said that U.S. residents bought $17.1 billion of long-term foreign securities while foreign purchases of U.S. long-term securities totaled $157.7 billion. The June U.S. T-bonds closed down 19/32nds at 121.14/32nds.

General Motors said that it earned $865 million in the first quarter of 2010 and some are saying that it has a chance for a full-year profit this year.

Most commodities finished lower again, pressured by concerns about Europe.

Grains and Cotton
The USDA said that last week’s export inspections of:
Corn totaled 38.5 million bushels, up 23% from a year ago.
Soybeans totaled 8.5 million bushels, down 48% from a year ago.
Wheat totaled 12.6 million bushels, down 17% from a year ago.

July soybeans were down 12 cents at $9.415, pressured by today’s outside markets and good growing weather.

July cotton was one of the few commodities that traded higher today, closing up .48 at 81.20, helped by expectations for tight world supplies this summer.

Livestock
In October of 2009, China said that it would eventually end its ban on U.S. pork and now they announced that U.S. pork produced on or after May 1st will officially be accepted in China. That is good news for hog producers, but July hogs closed down 2.22 at 81.60 with bigger concerns about Europe pulling down the world economy. It was the lowest close in over six weeks.

Lumber
An index of homebuilder sentiment from the National Association of Home Builders increased from +19 to +22 in May, the highest since August of 2007, but still a sign of pessimism. July lumber closed down its $10 daily limit at $251.30, the lowest close this year.

Canada’s Real Estate Association said that home sales were down 2.6% in April, but up 20% from a year ago. The average home price was up 12% in April from a year ago.

Metals
Concerns about Europe remain, but concerns about gold’s high price are also being talked about. August gold ended up .30 at $1,229.90.

In 2009, copper was one of the strongest commodities on the board, but fortunes have turned. Today, July copper dropped 20.2 cents to $2.9320, the lowest close in three months, hurt by Europe’s debt problems and talk that China’s economy may finally be cooling.

Energies
July crude oil closed down $2.21 at $73.22, still pressured by Europe’s problems. Meanwhile, 5,000 barrels of crude oil or more continues to gush into the Gulf of Mexico, courtesy of British Petroleum.

Currencies
The June euro spent most of the day lower with concerns that a new effort by the European Union to reduce budget deficits will stifle growth, but ended up .0002 at $1.2389.

Japan’s Cabinet Office said that machinery orders were up 5.4% in March, less than expected.

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