The U.S. stock market continues to rise with major indices nearing recent resistance. Investors are ignoring worse than expected trade deficit numbers and consumer sentiment data. Instead bulls are celebrating better than expected earnings news. Meanwhile a drop in the U.S. dollar is boosting commodities. Gold futures have almost erased yesterday's $10 drop with gold now trading north of $1,116 an ounce again. Crude oil is relatively flat just under $77.00 a barrel. Yet the energy sector is rebounding with the major indices.
Global markets were mixed. The Japanese NIKKEI index lost 0.3% and posted its third weekly loss in a row. Chinese markets were higher and near their 52-week highs. Positive comments from China's chief economist on the strength of the economy helped set the tone. Chinese stocks were also rising on speculation in an increase of M&A activity. The Hong Kong Hang Seng rose 0.7%. The Chinese Shanghai rose 0.4%. European markets were also divided. Most of the major indices were sinking lower only to reverse sharply late in the day. The French CAC-40 trimmed its losses to just -0.05%. The English FTSE and the German DAX both managed a 0.4% gain.
Here at home in the U.S. the economic data out today was bearish. The Commerce Department said the trade deficit in September surged more than 18% to $36.5 billion. Economists were expecting a deficit of $31.7 billion. Exports continued to rise for the fifth month in a row thanks to a weaker dollar. The bigger report today was the Reuters/University of Michigan consumer sentiment data. The preliminary report for November showed consumer sentiment falling from 70.6 in October to 66.0. This is an ugly report. Economists were expecting a small rise to 71.0. You might think that recent headlines about 10% unemployment would explain the sudden drop in consumer sentiment but the University of Michigan pointed out that the data was collected before the latest jobs report was released. That suggests that the next read on consumer could be even worse!
Stocks appear to be moving on better than expected earnings data. Dow-component Disney (DIS) reported earnings last night. DIS beat estimates by 5 cents with revenues surging past expectations. Shares of DIS are up 4% and hitting new 2009 highs over resistance at the $30.00 level and definitely giving the Dow Industrial Average a boost today.
This morning ANF and JCP also reported earnings. Abercrombie and Fitch (ANF) delivered a profit of 30 cents a share, which was 10 cents better than Wall Street expected. Year over year revenues fell about 15% and same-store sales plunged about 20%. J.C. Penney, the country's third largest department store, reported earnings that were one cent worse than expected. Yet investors ignored the third-quarter data and focused on management's positive earnings guidance for the fourth quarter. The stock is up sharply on short covering, up 7.8%, following yesterday's bearish breakdown under support.
Currently the S&P 500 index is up 0.8% around 1,096 and remains under resistance at the 1,100 level. The NASDAQ composite is up 0.9% but remains under resistance near the 2,180 level. The DJIA is up 0.9% and nearing its 2009 highs around 10,300. Small caps are showing the biggest bounce with the Russell 2000 index up 1.2% but the index remains under multiple levels of resistance.
Let's take a quick look at charts for the major averages:
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
In spite of the market's gains I'm not seeing a lot of movement on the OptionInvestor.com play list. BIIB did end up hitting our newly lowered stop loss above $47.00 this morning. NTRS, a new put play, is extending its losses with a 1.4% decline.