Stocks bounced back from yesterday’s losses with big gains. The S&P rallied 2.2% on the day. The bounce wasn’t all that surprising considering the deeply negative sentiment heading into this morning’s GDP reading. The potential for a much worse than expected figure was alleviated when the report came in relatively robust (though mostly government generated). The breadth of the rally was impressive at 4:1 and rally was less than impressive for such a large move, but that is a trend we have seen throughout much of this move higher. Daily Futures wraps up the action from across all markets:
The U.S. Commerce Department said that real GDP was up almost .9% in the third quarter, better than expected. From a year ago, real GDP was down 2.3%.
The U.S. Labor Department said that jobless claims were down 1,000 last week to 530,000. The December 2010 eurodollars were down .055 at 98.35.
The U.S. Treasury sold $31 billion of 7-year T-notes at a median yield of 3.02% with a bid to cover ratio of 2.65. The December U.S. T-bonds fell 1.04/32nds to 118.22/32nds.
Grains and Cotton
The USDA said that, as of last week, 2009-2010 exports of:
Corn remained up 12% from a year ago.
Soybeans fell from up 11% to up 9% from a year ago.
Wheat remained down 35% from a year ago.
Cotton fell from down 31% to down 33% from a year ago.
Rain is falling again over the western half of the Midwest and moving eastward. December corn closed up 10.5 cents at $3.795.
December cotton closed up .69 at 67.57 while rain continues to hit the already muddy cotton fields in the Mississippi River Delta.
Chinese officials agreed to end their ban on imports of U.S. pork. The ban was created six months ago in response to the outbreak of the H1N1 virus. Health officials agree that eating properly cooked pork is safe. December hogs closed up 1.25 at 57.20, the highest close in three months.
The USDA said that net sales of beef totaled 11,300 tons last week, up from 7,100 tons the previous week. December cattle closed down .65 at 86.27.
January lumber closed up its $10 maximum daily limit, helped by today’s better-than-expected GDP report.
March sugar closed up .88 at 22.81, bouncing back from yesterday’s loss with help from today’s weaker dollar.
In spite of record high gold prices, Barrick Gold reported a loss of $5.4 billion in the third quarter of 2009, after closing out its hedge positions. The company is expected to produce 7.4 million ounces of gold this year and 7.9 million ounces in 2010. December gold finished up $16.60 at $1,047.10.
The International Monetary Fund said that it expects 2010 GDP growth of 9% in China and 6.4% in India. December copper closed up 9.90 cents at $3.0295.
The U.S. Department of Energy said that underground supplies of natural gas were up 25 billion cubic feet last week to 3.759 trillion cubic feet. Supplies are now up 11% from a year ago.
Exxon reported earnings of $4.73 billion in the third quarter, down from $14.83 billion a year ago. December crude oil jumped up $2.41 to $79.87, encouraged by today’s positive GDP report.
Japan’s Trade Ministry said that industrial output was up 1.4% in September, the seventh consecutive month higher. The December yen ended down .0088 at 1.0928 ahead of tonight’s unemployment report.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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