The major indexes erased early morning losses and now settle back into a mid-morning range with the Dow Industrials (INDU) 7,731 lower by 44 points and the broader S&P 500 Index (SPX.X) 826 lower by 3.8 points after Labor Department reported that January factory orders rose a stronger than expected 2.1%, despite a downward revision to durable goods orders to 2.9% from 3.3%. Shipments (actual sales) rose 2.2% as inventories remained flat. This had the inventory to sales ratio back to the October record low of 1.31%.
The 2.1% rise in factor orders was slightly above the 1.8% forecast, but the downward revisions to the durable goods components shows modest growth at the more industrial level.
Treasuries here in the U.S. have been under some selling pressure today, with the benchmark 10-year YIELD ($TNX.X) 3.65% rising. Earlier today the European Central Bank's key short-term rate was lowered from 2.75% to 2.5%, and that rate cut may be having an impact on U.S bond markets as bond traders look to move some cash from Treasury bonds toward Eruo bonds on thought of another rate cut by the ECB. The ECB move was not as bold as aggressive as the 0.5% cut that many had expected, and interest rates futures indicated that another 25 basis point cut by the ECB is likely.
The above thinking may explain why equities really haven't been able to find much of a bid, despite some of the selling we've seen in the U.S. Treasury market.
Earlier, the Bank of England key's repo rate was left unchanged at a 48-year-low at 3.75%.
The euro, slightly down on the day, steadily increased after the ECB rate cut and flirted with the $1.10 level before retreating back to $1.0979.
The ECB move was not as bold as aggressive as the 0.5% cut that many had expected, and interest rates futures indicated that another 25 basis point cut by the ECB is likely.
Shares of Cisco Systems (NASDAQ:CSCO) $13.44 -2.17% are the most actively traded stock. In recent sessions we've been monitoring the stock during decline mode, and here again se see CSCO testing its marginally trending lower 200-day SMA of $13.41. With MACD now moving below its zero level, I still feel this stock looks vulnerable to the $12.50 level. If so, then technology stocks could see downside as psychology among technology bulls sours with a "favorite" breaking back below a longer-term moving average.
Intel (NASDAQ:INTC) $16.74 -1.4% gives back some of yesterday's gains and is this morning's second most actively traded stock at just over 24 million shares. Later this afternoon, after the close of trade, Intel holds its mid-quarter update. While many expect little surprises in the company's quarterly guidance, the call will be closely listened to, to ascertain how business trends have been doing the last few weeks.
While the major indexes suffer marginal declines, we're really seeing a pickup in new 52-week lows in the NYSE. Current breadth in the 52-week high versus 52-week low has the NYSE showing 114 new lows compared to just 27 new highs. NASDAQ continues to hold tough in this category, but still shows negative breadth with 51 stocks hitting new lows compared to 24 stocks trading a new 52- week high.
We're not getting my "suck'em in and spit'em out" type of trade I thought we might get from last night's Index Trader Wrap. With the more institutionally held NYSE stocks showing a greater number of 52-week lows, this has me thinking that yesterday afternoon's rally may have been the "suck'em in" part, and we're about to see some stocks get "spit out" to the downside into Friday's close.