The U.S. session started in the red, following on from a move lower from European equities that had tried to initially hold higher, and following on from benign earnings reports posted ahead of the market that showed little in the way of growth through 2009 from most companies reporting. The silver lining seemed to show itself around the dark clouds after Treasury Secretary Tim Geithner commented that the vast majority of U.S. banks are well enough capitalized to sustain themselves. That was in direct contrast to the doom and gloom on Monday that came from the fear that the banking stress test results were sure to reveal a poor outlook for those involved.
The fickleness of the market, coupled with the fear of loss around earnings time, created a day that turned a break of support on a major S&P price point at 830 into another break as resistance later in the day, and then managed to close in the green. The S&P is now testing the 850 price area again, and once again looking to instantly reverse a bearish day, of 4% losses, that came on Monday. If the bear market had volume this may have been another triple digit loser on the Dow Jones, but the selling is not as violent as it has been over the last six months, and the upside momentum is at least equal to anything that the negative days can offer.
On Tuesday afternoon the NYSE posted gains that averaged 1.5%. The DOW was on 7970 after a gain of 127 points (1.6%), while the S&P traded at 850, higher by over 2%, and the technology-heavy NASDAQ traded at the 1640 area, after moving up by over 35 points (2.2%).
Financial Sector: In trade on Tuesday the XLF, the financial sector ETF, gained over 0.7 points (7.5%) to trade at 10.61 on huge volume; 280,000,000 ETF's changed hands, way above the daily average of 230,000,000. The banking sector moved higher on news that the funding required to remain solvent was probably in place, and that although there would be casualties there may not be the carnage that filled trader’s minds on Monday. The Dax, FTSE, and Cac 40 all gained in a synchronized move higher in early trade, but gave back most of it to close at the break-even line in the face of some early U.S. selling pressure.