The last trading day of the second quarter went off without a hitch; the Dow Jones Industrial Average (DJI:^DJI) closed up 25.24 points or +0.10%.The S&P 500 index (SNP:^GSPC) rose 0.73 points, the Nasdaq Composite (^IXIC) gained 10.25 points and the Russell 2000 (^RUT) closed up 0.3% or 3.46 points.
During the second quarter the Dow gained 2.2% while the S&P gained 4.7% for its sixth consecutive quarterly gain and is up 6% compared to 12% the same time last year.
Last 2 days of second quarter, first 3 days of Q3
The mutual funds did exactly what they were supposed to do at the end of the quarter: they marked stocks up and then sold the losers later in the day with $1.65 to $2.7 billion in SPX to sell on yesterday’s close.
If you asked any indexer they would say the last few days were pretty typical for the end of the quarter. While the selling was big, just as it did during last week’s Russell rebalance, the E-mini S&P futures (CME:ESU14) caught a “bid” and rallied after the 3:00 cash close.
The money sold at the end of the quarter is usually put back to work going into the first trading days of the new quarter.
If not for the jobs number
We said a few weeks ago that after the June Quad Witching and the 2nd Quarter Rebalance, it would be vacation time; but we forget Thursday’s jobs report.
Despite the heavy economic schedule Thursday’s jobs number rates as the most important and if not for the number most traders said they would have taken off the whole week. According to Bloomberg economists expect to add 215,000 to 220,000 jobs in June.
After Thursday’s jobs report or by 9:30 CT we suspect most traders on the CME floor will be heading for the door for the 4th of July holiday.
Asian markets closed mixed to higher and in Europe 9 out of 11 markets are trading higher. Today’s economic calendar starts with the Motor Vehicle Sales number, Gallup US ECI, Redbook, PMI Manufacturing Index, ISM Mfg Index, Construction Spending and earnings from Paychex (NASDAQ: PAYX), A. Schulman (NASDAQ: SHLM), Acuity Brands (NYSE: AYI).
Our view
Welcome to the first trading day of July and the 3rd quarter. Despite the shortened week there is a large number of economic reports capped off with Thursday’s jobs report and early close. The PitBull said the 4th of July week is mostly bullish and the stats read that way.
Our view is for higher prices today and throughout the week. We also think any pullbacks or selloffs will be short-lived. And last but not least, look for the $1.65 to $2.7 billion in SPX sold on the close yesterday to be put back to work in the next few days.
One last piece of advice: We know people love to trade but we think it’s a good idea to cut back. The markets tend to be unforgiving during holiday weeks and we don’t want to see any big losses.
CME GROUP CHICAGO TRADING FLOOR HOLIDAY SCHEDULE FOR 2014
Thursday, July 3, 2014
Foreign Exchange, Interest Rates, Commodities, GSCI, Weather & Real Estate close at 12:00 CT (CME commodity options close at 12:02 CT, CBOT Mini Grains close at 12:30 CT) Equities close at 12:15 CTClosed Friday, July 4, 2014
As always, please make sure to use protective stops when trading futures…
- In Asia, 6 of 11 markets closed higher : Shanghai Comp. +0.10% , Hang Seng -0.13%, Nikkei +1.08%.
- In Europe, 10 of 11 markets are trading higher : DAX +0.32% , FTSE +0.55%
- Morning headline: “Global stocks, British Pound up at start of Q3”
- Fair Value: S&P -8.70 , NASDAQ -9.23 , Dow Jones -85.89
- Total volume: 1.15 mil ESU and 5k SPU traded
- Economic calendar: Today’s economic schedule: Motor Vehicle Sales, Gallup US ECI, Redbook, PMI Manufacturing Index, ISM Mfg Index, Construction Spending and earnings from Paychex (NASDAQ: PAYX), A. Schulman (NASDAQ: SHLM), Acuity Brands (NYSE: AYI).
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