April 04, 2012- Stock Tumble on Fading Hopes of Stimulus

The major U.S. index futures are pointing to a mostly lower opening on Tuesday, with sentiment remaining fragile given the apprehension concerning the economic recovery. This was evident from yesterday’s market reaction to an in line manufacturing reading. The markets now turn their focus to the minutes of the March FOMC meeting to glean clues on the Fed’s economic assessment and outlook and the likely course of monetary policy. Risk aversion is in play, as reflected by a pullback in prices of commodities and risky bets. After a nervous start on Monday, U.S. stocks advanced solidly after the Institute for Supply Management’s national survey showed that manufacturing activity expanded faster than expected in March. The major averages opened lower and remained below the unchanged line in early trading but began climbing after the release of the results of the ISM’s survey. After rallying till the afternoon, the indexes went about a consolidation move in the afternoon. The averages pared some of their gains in late trading yet closed notably higher. Technically, markets are at resistance levels and looking to confirm support if this rally is to continue. With upper and lower trend lines converging a confirmation of a break to the down-side or up-side is evident.