1. Moving the markets

Aimless meandering best describes today’s early part of the session, during which the major indexes, except for the Dow, hovered around their respective unchanged lines. A sudden mid-day pump not only pushed the two indexes into the green but also to a new record close. The Dow was weighed down, as poor profit reports by component members Caterpillar and Boeing kept the index in the red all day long.

The Nasdaq held up surprisingly well, despite the Justice Department launching a broad anti-trust investigation into the big tech companies (FANG names). Depending on the extent, this action could eventually cause this rally to stagger.

On the economic front, we learned that New Home Sales missed expectations (646k vs. 658k) despite a collapse in mortgage rates, which did not bring back an onslaught of buyers. Adding insult to injury, the purchases for March, April and May were all revised lower. However, YoY new-home sales rebounded.

Manufacturing hit the skids again, not just here in the U.S. but also in Europe and Japan, while the domestic service sector beat expectations. As one analyst pointed out, this simply means “we have a two-speed economy with a steady service sector growth masking a deepening downturn in the manufacturing sector.”

I see two conflicts righty now affecting the markets. One, central banks are about to embark on more easing, yet on the other hand, the slowdown of growth on a global scale, along with some geopolitical factors, is weighing on traders’ minds. Can more central bank intervention really extend this already overextended business cycle?

I guess we’ll have to wait and find out.

1. Moving the markets

It was a session during which the major indexes predominantly hugged their respective unchanged lines without showing much directional preference.

The exception was the Nasdaq, which benefited from strength of big-tech companies, despite the number of declining stocks outnumbering the advancing ones. That means, the drive higher was the result of the more liquid and larger cap companies like Microsoft, Amazon and Apple.

The Dow barely managed to close in the green, while the S&P stayed above its unchanged line all day and closed with a +0.28% gain. Traders are on edge as this week will bring a whirlwind of earnings results.

About one-third of the Dow components will be on deck and some 144 companies of the S&P 500 are due to present their report cards, including media giant Facebook, whose results are eagerly awaited this Wednesday.

Better than expected outcomes could certainly be a driving force to higher prices, but in the end, it’s all about the liquidity, or lack thereof, in the global financial system, as this chart suggests.