每日市场点评 --- July 16, 2008

The market had a huge rally on this Wednesday. All three major indices gained more than 2.5%, making it the best single-day performance since April 1st. The news on the economic front was actually more inclined to the negative side. After yesterday’s hotter than expected PPI figures, the headline CPI increased 1.1% in June. Economists were looking for a number close to 0.6% obtained in May. On a year over year basis, the CPI surged 5% from last June, the biggest jump since 1991. Excluding food and energy, the so-called core CPI advanced 0.3% in June compared with the previous month and 2.4% from a year before. The core CPI reading also exceeded what economists had expected. In a separate note, industrial production rebounded 0.5% in June from a decline of 0.2% in May. The gain is partly due to resolution at plants that had been idled during the American Axle strike. Accordingly, capacity utilization increased to 79.9% from 79.6%. Both measures exceeded market consensus. Finally, the NAHB housing market index fell in July to a record low of 16, down from 18 in June, indicating we may see further weakness in new home sales for the next few months.

Energies, basic materials and utilities were among the only major sectors that finished the session in red. Following yesterday’s $6-plus plunge in crude price, which was the biggest one-day loss in 17 years, crude lost another $4 in today’s trading due to an unexpected built-up in weekly inventory report. On the winners’ list, we had names like financials and transportations. Financials had the biggest one-day rally in its history partly due to a better than expected earnings report from the fifth largest US bank Wells Fargo. However, part of the rally in financials could also be attributed to short covering. Within transportation, airlines had its biggest one-day gain ever but year-to-day, the index still lost over 50%. The CRB commodity index continued to slide due to weakness in energies and metals. Treasuries were sold off partly due to reverse of flight to quality trade and partly due to rising CPI. The US dollar was stronger against most major currencies after a weak open. The VIX index plunged more than 3 points and closed at 25.1. The market breath was decisively positive.