U.S. equities moved the S&P market under support at 845, the 20 day SMA area, in early trade as the impact of the financial sector imploding again weighed on sentiment. As the NYMEX markets closed a rally off the lows took place which went on the reverse tack again at the close. The day ended virtually flat, but it was not without its moments in between. Consumer based shares moved on the strength of the Conference Board’s consumer confidence numbers, whilst financial sector assets took a beating from fears that stress test results will be short of good news next week.

The S&P is higher by more than 25% since March 9th, and is therefore susceptible to tests of support, but unless big volume increases come into the market it will be a struggle to get things moving from here. The 845 area may be the swing point, but ahead of the FOMC rate decision on Wednesday a damage limitation exercise may take place.

It is unlikely that there will be too many good news stories coming from the Fed on Wednesday, but conversely the bad news does look to be baked into to valuations. With earnings season in full swing the momentum may just have to be contained. It does however look as though the short selling is at least being matched with attempts to rally.

On Tuesday the NYSE posted losses that averaged 0.4%. The DOW was on 8016 after a loss of 8 points (0.1%), while the S&P traded at 855, lower by 0.2%, and the technology-heavy NASDAQ traded at 1673, after moving down by 6 points (0.3%).

The European markets dropped lower in trade on Tuesday, unable to spark anything that looked remotely positive, and produced a sea of red numbers that initially empowered the Usd. The German Dax closed at 4607 (-1.5%), the London FTSE closed at 4096 (-1.7%), and the French Cac 40 stood at 3.051 (-1.7%).

Financial Sector:
In trade on Tuesday the XLF, the financial sector ETF, dropped 3.1%, to trade at 10.43, and did it on dramatically lighter volume; 132,000,000 ETF's changed hands, below the daily average of 228,000,000. The banking sector moved lower after the previous session woes were added to by stress test results fears next week, and after earnings numbers were pushed to the fore again. Without a solid period of trade from the banking sector the main equity markets are going to struggle to hold the higher ground, and that by default will empower the Usd.