It was another quiet day on Wall Street. The Dow swung in a range of 80 points before ending the day with a loss of 36 points. Nasdaq, the worst performer among the big three, closed the day lower by 0.7%. There was simply little good news in today’s session. In fact, we got some worse-than-expected economic news plus disappointing earnings news from the Alcoa and AMD. WaMu’s capital injection plan was not as rosy as some had hoped for either. But at the end of the day, the market still held up relatively well.

Start with latest reading in the small business optimism index. According to the National Federation of Independent Business (NFIB), their members have never been more pessimistic as the monthly index just dropped to the lowest level in the 22 years since the NFIB started conducting this survey. Unlike their big counterparties, many small businesses derive most if not all of their revenue locally so a domestic recession tends to hurt them the most. Since small businesses account for 36% of all net job gains from 1990-2005(based on the Bureau of Labour Statistics), we may see further weakness in the job market ahead. The news on the housing front was not cheerful either. The number of Pending Home Sales for February dropped -1.9% while economists forecasted a decline of 1%. It suggested that there is still a long way to go before we see the bottom of the housing downturn. Finally, we got a chance to look at the Fed minutes for their March 18th meeting. Based on the minutes, many Fed officials (maybe “majority”?) felt that an economic contraction was likely and the economy may be in recession in both Q1 and Q2 of 2008. Although recession never sounds pleasant, it does mean the Fed is ready to make more interest rate cuts during the next few meetings. Indeed, the bond market increased the chance of two more rate cuts by June right after the minutes were released.

Financials and techs were the biggest losers of the day. Commodity stocks continued to do well despite a pull back in the CRB commodity index. The US dollar was mixed against the major currencies but it strengthened quite noticeably against the GBP. Treasuries were mixed with shorter maturity regaining some recent losses. It is worth noting that the transportation index continued to outperform the broad market in a pretty significant way: It was up by 9% so far in 2008 compared to a 7% drop in the S&P500. It was quite amazing that the transportation index can outperform by a wide margin despite imminent recession worries and sky-high oil prices. After the bell, UPS just issued a profit warning and it will be interesting to see how the transportation index will react in tomorrow’s trading.