The bulls tried to keep upward momentum going yesterday, but other than a quick peek above the unchanged line, the major indexes meandered in negative territory and closed to the downside.
Profit taking contributed to the sagging of financial stocks in the last hour. Activity was confined within a small trading range, which is not surprising after Friday’s strong breakout above the S&P;’s resistance level.
Europe contributed to the weakness in financials as Moody’s downgraded the rating of Anglo Irish Bank to one level above junk. Also, concerns mounted that banks with sizable brokerage departments might see fewer earnings because of reduced trading volume over the past four months or so.
Bonds rallied, as interest rates were lower with the Treasury selling two-year notes at a record low yield of 0.441%.
If you think that’s a sign of deflation, you are correct, despite of what some of the inflationary worry birds would have you believe. Sure, eventually inflation will be an issue to be reckoned with; however, right nowhere it’s nowhere in sight, despite’s the continued Fed’s attempts to create it.
Chart courtesy of MarketWatch.com