Risk Returns after Profit-Taking Thursday

With the Dow climbing for six consecutive days and breaking fresh 13-month highs, the 0.91% sell-off yesterday was prompted more by timely profit-taking rather than plunging sentiment. After a one-day break, investors are already back in buy-mode this morning, as all three indexes are looking modestly higher.

The question will be whether that confidence can last the morning. The trade balance is a never-too-pretty reminder of the nation’s growing debt, and consumer sentiment is unlikely to surge with the unemployment rate hitting double-digits for the first time in 26 years just two weeks ago.

Outside the US, the main economic news this morning is that the Eurozone has technically exited the recession with third-quarter GDP inching 0.4%. Annual GDP is down 4.1% but that’s an improvement from 4.8% year-to-year decline in Q2. 

Two hours before the bell, Spot Gold is moving up $5.60 to $1109.40. The precious metal retreated earlier after saying hello to new peaks above $1123 yesterday. Meanwhile, WTI crude oil is up 37 cents but remains several dollars below the $80 mark at $77.31 per barrel.

Conversely, The US$ index is weaker this morning after two days of gains. But as Benjamin Reitzes from BMO notes, “most of the gains against it are mild.” 

World Bank President Robert Zoellick, who earlier this week said the US cannot become complacent about the dollar’s decline, told an audience in Singapore earlier today that, in fact, there is little the U.S. can do to stall the “natural” depreciation of the U.S. dollar.

Key Events Today:

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