Equites initially advanced as oil inventories were not as great as expected, then traded lower as the dollar rallied which caused crude to erase a 4% advance, and then rallied at the close on monetary policy assumptions posting about a 0.50% advance.

The S & P has climbed about 12% since it 22 month low on February 11, erasing the worst annual start for equities on surging crude and central bank actions.  There is virtually no chance of an interest rate hike in April and the probability of an increase in June has now fallen to 28% from 46% a week ago because of Yellen’s comments, comments suggesting the central bank would tolerate inflation above its target instead of tightening policy too soon.

Will the outlook change yet again if tomorrow’s employment report is stronger than expected?  Probably.

The S & P has now gone 12 sessions with a swing of at least 1%, the longest since June according to Bloomberg.   Is volatility subsiding or is this just the calm before the storm?

Earning season commences April 11.  Analysts are forecasting S & P 500 profits to fall by 9.3% compared with predictions for a 4.5% drop two months ago.  How will these results be interpreted?  Will volatility again increase or will the focus remain on monetary policy and crude?  I will argue the latter.

What will happen today?

Last night the foreign markets were down.  London was down 0.40%, Paris down 0.89% and Frankfurt down 0.47%.  China was up 0.29%, Japan down 0.71% and Hang Sang down 0.13%.

The Dow should open flat.   March will be the first “up” month in four as a huge rally in oil propelled gains, a rally few had anticipated 30 days ago.  The dollar also weakened a weakening that few also had expected.  The 10-year is up 2/32 to yield 1.82%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.