Four up days on Wall Street were KO’d with falls for stocks, but it was not a convincing rejection. Commodities were weaker but they have surged recently.
At the moment the dips are being bought as there is still a lot of confidence that this rally is for real, despite a correction of some kind still to happen.
There is a lot of cash on the sidelines especially with fund managers and they could try to make some money, especially if they missed a lot of this rally.
At one stage the Dow was down around 140 points, but this was virtually halved in late trade. Experts still think the rally has legs.
“We had a big consolidation in May. We broke up at the turn of the month of May. Now we’re going into a retest of that breakout. Then I think we’re going to go higher,” Nick Kalivas, vice president of financial research at MF Global told Fox Business. “I would be more alarmed if the Dow breaks through 8500. That would be a sign there are some serious problems technically.”
America coming in with an excess supply of oil in its inventory report took the shine off oil and its price fell $3 to $US 66.12 a barrel. This didn’t help energy stocks and this will play out on our market today. Also the Oz dollar slipped to 80.04 US cents as the greenback gained ground.
On the economic front, progress continues toward a recovery but at a slower pace than many had hoped.
The Institute for Supply Management's service sector index rose in May from 43.7 to 44, but this was below expectations. Also factory orders grew 0.7% in April, which was also under forecasts of 1%. By the way, in March this figure slid 1.9%.
The great news locally was the GDP number for March, which has KO’d the likelihood of a technical recession. This will be great for business and consumer confidence.
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