US Market Commentary (After Market Close): Flat Close To A Choppy Week

Today's flat session capped off a choppy week, with the end result being a weekly gain of +0.6% in S&P 500. Stocks had continued their bullish trend during the first part of the week, but a sharp intraday reversal yesterday, and another intraday pullback today, pared a good portion of the week's gains. Although yesterday's weakness followed Greece headlines and a disappointing bond auction, and today's pullback took place amid escalating geopolitical concerns after a South Korean naval ship sunk, neither intraday pullback was directly triggered by a specific fundamental catalyst, making the moves more technically driven. After starting today on a positive note, equities gave up their early gains in a sharp late-morning pullback. 

Headlines stoking the idea of increased tensions between South and North Korea circulated, and most likely contributed to some risk-par ing, but it is still not clear if North Korea was involved in the sinking of the a South Korean naval ship and naval skirmishes between the two countries are not uncommon. 

 

Other than headlines on the Korean situation, intraday newsflow was relatively light and volume was below average. Before the open, revisions to Q4 GDP were slightly worse than expected, but didn't impact the pre-market trading picture. A better-than-expected revision to the March University of Michigan Confidence reading helped boost equities at 9:55 ET, but the move was short-lived and no follow-through materialized. Today's action followed mixed trading overseas, with strength in Asia being offset by modestly weaker performance in major European markets. Notably, Greece's ASE Index rose 5.6% on the EU debt backstop. While the S&P 500 is slightly higher on the week, market volatility picked up a bit on the late-week pullbacks. The CBOE Volatility Index (VIX) rose above 18 today, up ~2 points from last we ek's 22-month low near 16. The rise in the VIX indicates increased expectations for near-term volatility. This modest rise in the VIX also comes ahead of next week's full slate of economic data, which could cause greater fluctuations in the market. Interestingly, the big economic event of next week -- Friday's (4/2) March employment report -- will take place on a day when the stock market is closed for the Good Friday holiday. The bond market will be open however, and the current expectation is for a +190K increase in Nonfarm Payrolls. 

 

Prior to the week-end employment report, data on Personal Income and Spending (Monday), Consumer Confidence (Tuesday), ADP Employment Change (Wednesday) and Weekly Jobless Claims and ISM (Thursday), will all be released earlier in the week. In addition to an abundance of economic data, there are a few earnings of interest next week, with bigger names including fertilizer company Mosaic (MOS) and Blackberry maker Research In Motion (RIMM), whic h are both due out Wednesday after the close.