(as of 7:15 AM PST)
Stocks are on the defensive despite solid economic data this morning. Jobless claims were at their lowest level in years, inflation appears well under control and the Chicago PMI, a key measure of industrial activity, swung to the positive. Despite all the good news, markets are down across the board between 1/2 and 1%. This may be another example of the disjointed relationship of 'good news' to market reaction. The better the news the more likely the Federal Reserve Bank is likely to start interest rate increases. Financial stimulus has held markets up for some time now and fears of a policy change make investors nervous. The US dollar is recovering from early losses in what appears to be a 'risk off' market, where traders seek the safety of the US Treasuries. Gold is falling heavily, giving back all of yesterday's gains while oil is holding steady after a nice rally to start the week. Today's negative market reaction has investors on edge. Buyers seem in short supply. Perhaps the anomaly of 'sell in May and go away' is keeping many on the sidelines. 'Sell in May and go away' reflects many investors attitude that most market gains occur between October and May and that it is best to sit out the summer period. Those who chose that strategy last year missed out on some sizable market gains. Regardless, it looks to be a rocky day on Wall Street.
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