[Chart courtesy of MarketWatch.com]

1. Moving the markets

While the Dow continued to pump all day, the other two major indexes did not find a driver to participate in the ramp-a-thon and ended the session in the red. The S&P 500 closed just about unchanged while the Nasdaq surrendered 1.22%.

The Nasdaq had been struggling all day, which was the result of Netflix tanking an epic -35% (-63.1% YTD), after having disclosed the loss of 200k subscribers in the last quarter along with weak results and guidance. The Dow was helped higher by strong earnings from Proctor & Gamble.

FactSet posted this:

Roughly 12% of S&P 500 companies have reported first-quarter earnings thus far, with 80% of those names beating analyst expectations,

But the real story that’s behind the market’s tepid reaction during earnings so far is the lack of corporate guidance.

Bond yields sustained their drive higher with the 10-year touching the 2.94% level early on, its highest since late 2018, but closed lower by almost 10 basis points at 2.846%.

Noticeably absent was the short squeeze, which did an about face with member stocks tanking, as they are supposed to. Quipped Zero Hedge, after looking at this chart, tomorrow we should squeeze back up.   

The dollar pulled off its lofty level, Gold ended up about unchanged, but the gold ETF GLD gained +0.49%, while Crude Oil dumped and pumped but closed above the $100 level.  

[Chart courtesy of MarketWatch.com]

1. Moving the markets

Today was comeback day with the S&P 500, after having fallen for two straight weeks, finally receiving a boost, along with the other major indexes, to end the session in the green. The Nasdaq led the charge with a gain of over 2%.

Some analysts contributed this bounce to sentiment and positioning as having been too bearish, hence a bullish response resulted, also because of better-than-expected bank earnings with Citizen’s Financial jumping more than 7%, while powerhouse JP Morgan added a more modest 2%.

A few tech and media companies like Disney (+3.8%) and Netflix (+3.7%) joined the party, while Microsoft and Alphabet each gained over 1%. “Despite recession concerns, the underlying economic data have been holding up fairly well,” added a strategist at Edward Jones.

Still, this solid rebound was astounding for two reasons:

1. It happened in the face of a continued surge in bond yields. The 10-year added almost 8 basis points (bps), to close the session at 2.94%, with the 3% level now in striking distance. It remains to be seen whether a break above it will bring bearish sentiment back in play.
2. The world as a whole and the IMF have slashed global growth outlooks, slamming crude oil lower, while Fed mouthpiece Bullard threated with 75 bps hikes instead of the previously announced 50 bps.

Traders and algos did not care, and the rally was on thereby erasing some of the recent losses. And, as you might have expected, the ever-lurking short squeeze gave an assist and helped sustain the bounce into the close.  

With yields heading higher, the US Dollar followed suit and reached its top level since June 2020, according to ZH. Gold was the victim of the dollar and bond yield surges and gave back some of its recent advances.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

The major indexes snaked aimlessly above and below their respective unchanged lines without making headway, as ephemeral gains were quickly surrendered with uncertainty about interest rates, while a flood of upcoming earnings reports kept the bulls and bears in check.

It was a rollercoaster ride with the 10-year bond yield touching 2.88%, which was its highest since late 2018. As recently as March 1, that yield stood at 1.71% and exploded upward by almost 10% due to the Fed announcing a more aggressive stance of fighting inflation.

The big unknown is how far bond yields will rise, and stocks fall, before the Fed caves and saves the markets again, as it did the end of 2018. Or will it be different this time?

Commodities continued their surge (DBC +1.14%) with Crude Oil heading towards $108, and Natural Gas climbing above $8 for the first time since 2008, as ZH pointed out. March’s massive short squeeze appears to have run out of ammo, the US Dollar ramped higher, while Gold briefly surpassed it $2k level before fading below it.

All eyes are on the earnings reports of the bellwether tech firms, which may set the directional tone for the remainder of the month. A big ingredient of these reports will be forward guidance, as increased costs will be a real challenge for all companies.