The major indices are seeing relatively minor gains in a quiet session as investors wait for Intel's earnings report tonight. Investors digested a handful of economic data while President Obama voiced his desire to tax the biggest banks. The dollar's decline was fueling a small bounce for commodities yet energy and mining stocks are lower on the session.
Asian markets were mostly higher. After yesterday's big decline the Chinese Shanghai index bounced with a 1.3% gain. The Hong Kong Hang Seng closed with a 0.15% decline. The Japanese NIKKEI displayed relative strength with a 1.6% gain and another 15-month high. Volume in the Japanese market hit seven-month highs again thanks to massive trade in shares of Japan Airlines (JAL). Shares of JAL have been plummeting for days on bankruptcy fears and finally produced an oversold bounce with a +14% rebound from 7 yen to 8 yen. Volume in JAL was more than one billion shares.
European markets saw a widespread gain. Drug stocks and mining stocks led the advance. The European Central Bank kept interest rates unchanged at 1%. The French CAC-40 rose 0.37%. The German DAX gained 0.43%. The English FTSE rallied 0.45%.
The big story today is President Obama's new plan to tax the 50 largest financial firms to get "every single dime" back to the tax payer. Current estimates suggest this new tax would bring in $90 billion in the first ten years and nearly $117 billion over twelve years. Unfortunately, the President doesn't seem to realize that most of these banks will just pass this expense through to its customer base. I read one article on the subject that said even companies that did not receive TARP money and those that have already repaid TARP money would still be subject to this tax.
On the economic front traders were sifting through data from the wholesale inventory and sales number, the December retail sales data, and the weekly initial jobless claims. The Commerce Department said wholesale inventories in November rose 0.4%, which was better than the 0.3% estimate and marked the second monthly gain in a row. Sales at the wholesale level jumped 2%, which was the biggest move in two years. The increase in wholesale inventories is seen as a bullish signal for the economy.
Unfortunately the good news in the wholesale data was countered by disappointing results for retail sales. The Commerce Department said December's retail sales fell 0.3% versus estimates for a 0.5% gain. In November retail sales gained 1.8%. To see retail sales fall 0.3% during the height of shopping season is pretty disappointing. Consumer spending accounts for nearly 70% of the U.S. economy.
Another downer today was the weekly initial jobless claims, which came in at +11,000. Economists were only expecting +3,000. Total applications for the week hit 440,000.
The Dow Industrials are hitting new 52-week highs. The S&P 500 is edging closer to resistance near 1150. The NASDAQ is inching toward resistance near 2320. The small cap Russell 2000 is also nearing its highs from last week. The SOX semiconductor index is down 0.9% ahead of Intel's earnings tonight. Wall Street expects Intel to report a profit of $0.30 a share. Expectations are pretty high for Intel and the stock is trading at a new 52-week high. I suspect that odds are very high the stock could see some profit taking tomorrow.
The U.S. dollar's decline has pushed gold up nearly $4 to $1,140 an ounce. Crude oil futures are hovering sideways near $79.60 a barrel. Silver is up slightly while copper is seeing a small decline.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
The market is kind of quiet today and we're not seeing a lot of movement on the OptionInvestor.com play list. ESRX is showing some relative strength. GS is trying to bounce. The plan is to exit the JPM trade today. LLL has hit our first target to take profits near $90.00. UNH is showing relative strength with a 2.1% gain.