US EQUITIES POST GAINS. TECHNOLOGIES LEAD MARKET HIGHER DESPITE CONFIRMATION OF FOMC GLOOMY FORECAST. .
US Equities posted gains, led by technology and commodity stocks, as equities found support from overnight downward pressure, after the US Government announced an extension of TARP (Troubled Asset Relief Program) funds to insurance companies and two major US homebuilders set forth plans to merge helped rally equities from overnight lows created from a worse than expected earnings report from Alcoa, the aluminum producer and leadoff for earnings season.
Early gains in equities were fueled by a better than expected reading on US Wholesale Trade. The figure showed that inventory was coming off producers shelves at nearly doubled the expected rate. This represents the first pickup in nearly 6 months. Energy and commodity stocks recouped recent losses after the EIA energy report showed a less than expected build in crude oil stocks. This helped rally the price of oil back above $50.00 and revitalized and number of commodities off of historic lows. Insurers rallied after the government reported that TARP funds could be extended to insurance companies that have holding banks as part of their asset base. Market gains retreated in the afternoon as the release of FOMC minutes showed the Federal Reserve downgrading its forecasts for a possible late 2009 recovery and showing a rare united front with regards to meeting the challenge of the US and global economic crisis aggressively. Stocks rebounded near the highs of the session as buyers found value particularly in the cash rich tech sector.
Technically, June Dow Futures traded quietly within a tight range. Market continues to skirt the high end of overbought indicators. The market appears to be setting up for a pullback to 7550, with additional support at 7420. Initial resistance should be met near the 7880 level, with upward breakout level at 8104.
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