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It shows that there is some resilience out there and that the aspect that typifies the current state of the market more than anything else is volatility, with the Dow swinging by multiple percentages in a single day.
Even with today’s sizeable rebound, the overall sentiment remains risk-off, which has been building ever since Ben Bernanke’s post conference last week in which he indicated the Fed’s readiness to scale back its asset purchases later this year provided there is sufficient evidence that the economy is able to withstand the reduction in stimulus.
We will have several further pieces of evidence available tomorrow to help gauge the health of the US economy, including durable goods orders, new home sales and the Conference Board’s consumer confidence survey. Orders for durable goods rebounded quite strongly in April after a steep drop in March and it will be interesting to see if May’s data can hold up. A survey by Thomson-Reuters gives a median forecast of a month-on-month change of +3%.