Ominous Signs at the Periphery V

from April 14, 2005

Historically, April is one of the strongest months for the stock market for obvious reasons (IRAs, Bonus payouts, etc), but yet with so many cracks in the economy becoming more evident, even the trend traders have to bow to economic fundamentals. The summer is my best guess as to when the sh** really starts to hit the fan...Good luck...

General Motors (GM: news, chart, profile) was another notable decliner on the Dow, down 4.7% on concern discretionary spending on items such as cars would fall in lockstep with an economic slowdown.

Ahead of the bell, two economic reports allowed investors to take the pulse of the U.S economy.

First-time claims for state unemployment benefits fell by 10,000 to 330,000 in the week ended April 9, roughly in line with economist forecasts. See full story.

Meanwhile, U.S. businesses added 0.5% to their inventories in February while their sales fell 0.4%, the Commerce Department said. The drop in sales was the largest since April 2003.

The dollar gained against the yen after the International Monetary Fund drastically slashed its growth forecast for Japan. The euro got a cross-trading kick lower on the greenback's rise against the Japanese currency. See currencies.

Gold futures tumbled as the strength of the dollar sapped interest in the precious metal.

On the bond market, long-term U.S. Treasurys rallied on the weaker-than-expected salescomponent of the business inventories data.