STOCKS ERASE LOSSES AND END FLAT: Here's What You Need To Know About The US Market Overnight

Horse raceREUTERS/Eddie KeoghSam Twiston-Davies on The New One jumps the final fence of the Champion Hurdle Challenge Trophy at the Cheltenham Festival horse racing meet in Gloucestershire, western England March 11, 2014.

Markets spent most of the day in red before recovering almost all losses.

First, the scoreboard:

  • Dow: 16,330.8 (-20.4, -0.1%)
  • S&P 500: 1,867.0 (-0.6, -0.0%)
  • Nasdaq: 4,319.7 (+12.5, +0.2%)

And now the top stories:

And now the top stories:

  • With no major economic data scheduled today, investors and traders had their eyes on China where slowing growth and plunging copper prices have everyone freaked out that the world’s second-largest economy is inching toward a credit crisis marked by cascading bond defaults. Here’s Bank of America Merrill Lynch’s Ting Lu: “Bad news from China continued to feed markets. Markets (especially copper) were hit last night by news on the bond of Baoding Tianwei Baobian Electric Co (TBE) which was suspended from trading on 11 March. For some investors who have already been deeply worried about ‘Bear Stearns Moment’ or an imminent ‘Lehman Moment’, this could be perceived as another snowflake to trigger an avalanche.”
  • While Lu expects volatility to continue in the markets, he’s not too worried it’ll melt down. Here’s Lu: “We definitely don’t think so because: (1) Let’s not underestimate Chinese onshore investors’ resilience; (2) Defaults of bonds and trust products are not on a similar scale to a collapse of a major financial institution which is intertwined with many other institutions; (3) The Chinese government, with its massive savings and control, still has a deep pocket to at least prevent systemic credit squeeze; (4) The Chinese economy, thanks to its huge savings, has a below 70% loan-to-deposit ratio, US$4.0tn FX reserves, and a very small amount of foreign debt. Like all other economies, the Chinese economy has its own ups and downs, but we think the chance for China to face a severe downturn and financial crisis is rather small.
  • The S&P 500 has basically been trading sideways near its all-time high for the last week and a half. In a public webcast on Tuesday afternoon, DoubleLine Funds’ Jeffrey Gundlach said he was discouraged by the stock market’s loss of momentum. He noted that stock like Amazon.com had begun to roll over. The key indicator he is watching right now is margin debt, which is currently at a record high. “It is in the scary zone,” said Gundlach. “If and when it hooks over, that’s when you’re likely to see a double-digit decline in market indexes.”
  • Don’t Miss: WHAT HATH QE WROUGHT? Jeff Gundlach Answers In This Excellent Presentation »

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