Market Preview: Catching a Bounce
NEW YORK ( TheStreet) -- In keeping with 2012's nearly non-stop upward trajectory, the buyers returned on Wednesday.
The bulls got an assist from a well-timed hint at another round of quantitative easing, but a gain is a gain and the fact that Tuesday's drop didn't spark a round of nervous profit-taking has to be heartening.
When the dust cleared, the Dow Jones Industrial Average had clawed back nearly 80 points, the S&P 500 was again sitting above 1350, and the VIX had returned to the relative calm of sub-20 levels. Even the Nasdaq Composite , with its gaudy 10%-plus gain this year, caught a bounce.
It helped that the ADP employment change data seemed to bode well for Friday's February jobs report. The survey found that private payrolls swelled by 216,000 last month, up from 173,000 in January. That was actually a little below a consensus view of 220,000, but economists were impressed that the hiring was mostly seen in medium-sized businesses (88,000 jobs) and small businesses (108,000).
Economists are looking for the government's report to show nonfarm payrolls swelled by 240,000, but the sentiment is now building for an upside surprise that would provide further confirmation that the recovery is building up some real momentum.
A bigger deal on Thursday though will be the looming deadline on Greece's private creditors signing off on the restructuring deal that ultimately erase about 75% of the value of their bond holdings. About half of the debtors are on board, according to a report from The Associated Press , and 70% acceptance is being viewed as a tipping point for the deal to go through.
Meanwhile, it's worth noting that Main Street is still plenty skittish about U.S. stocks. According to the latest data from the Investment Company Institute , long-term mutual funds investing in domestic equities lost a whopping $3.06 billion in the week ended Feb. 29. Some of that is folks taking money off the table but not all of it.
Overall, funds investing in equities lost a total of $2.84 billion (international equities saw inflows of $226 million), breaking a streak of three straight weeks of inflows into stock funds. Bonds continued to rack in the big bucks, seeing inflows of $6.69 billion.
The near-constant drive higher off the October lows has made timing this market particularly difficult. By the time investors got comfortable with indications that the economy was improving, stocks had already made a major move higher with nary a pause. Tuesday wasn't much of a washout but still the buyers answered the call. If Greece is able to nail down the deal with its private creditors in time and Friday's jobs report is solid, stocks could be off to the races once again.