Yesterday’s rally proved to be short-lived. All three major indices ended the day and the week lower. The Dow, which was dragged by an almost 9% loss in its component AIG, started the day off by more than 100 points and was staying in the negative territory throughout the session before ending the day lower by 120 points. For the week, the market was off by around 2%, ending a 3-week winning streak. The only economic news came positively as the trade balance narrowed more than expected to a deficit of $58.2 billion, which should have a positive impact on Q1 GDP revision. However, another record high oil price prevented the market from having any meaningful rally.

All major sectors finished the session in red. Interestingly, most commodity sectors were lower despite a new high in the CRB commodity index. It is worth noting that crude oil set a new record closing high in every session this week. After the bell, a profit warning from FedEx clearly showed the impact of high oil price on the broad economy. The narrower trade gap didn’t help the US dollar, which was lower against most major currencies. Treasuries were mixed in today’s session with the yield curve flattened somewhat. As for the week, the two-year note yield dropped 22 bps while the ten-year yields fell 9 bps.