Stocks posted low volume gains ahead of tomorrow jobs report. IBD noted that the rally is under pressure and has been experiencing some institutional selling of late. At the close the Dow was up 14 points to 20,662.
Yesterday’s market action showed that for now at least, markets are under pressure and need some type of catalyst to break above current levels. The Dow had been up by over 100 points on Wednesday but then the minutes for the last Fed meeting were released and contained in them were indications that later this year the Fed will start shrinking its balance sheet which currently stands at over $4 trillion. This huge amount is the result of the bond buying program whereby the Fed picked up boat loads of mortgage and gubment bonds. These need to be unwound slowly so as not to disrupt current bond markets.
In economic news the service sector continues to grow although the latest reading was off a bit. Indicators also show that manufacturing activity is picking up and that employment and inflation are headed in the right direction. The ADP private-sector payroll data increased 263,000 in March which beat consensus calling for gains of about 190k.
WTI crude oil gained 1.05% to $51.68. Refinery runs are increasing as the US summer driving season approaches and gasoline inventories are in decline. Crude stockpiles remain near highs. Natural gas was up 1.1% to $3.30 per MBTUs.