Lows of the day

Lows of the day

US stocks gapped higher at the open but they are giving some of it back. The S&P 500 is up 9 points to 2887 from a high of 2898 -- roughly halving the gain.

There are two factors at play. The first is the consumer confidence report. On the face of it, the report is great news and shows the current situation index at the best since 2000. It's a forward looking indicator and shows consumers are gearing up for a healthy holiday season. The flipside of it is that the Fed may see it and get back to the mid-cycle adjustment talk and say that the data doesn't warrant a cut -- if not in Sept, than October.

The second factor is month-end rebalancing. With the rip in bonds and slump in stocks there is pressure to sell bonds and buy stocks. Expect more of that in the days ahead, all else equal.