The stock market continues to struggle in spite of better than expected economic data and impressive earnings numbers. The GDP came in a +5.7% and the Chicago PMI hit is highest levels since 2005. Yet investors are not impressed. Strength in the dollar is pressuring commodities. The UUP dollar ETF is crossing up over its simple 200-dma. Crude oil is down 25 cents near $73.40 a barrel. Gold is down $2 near $1,082 an ounce.
It was not a good month for Asian markets. Yesterday's oversold bounce has already failed. The Japanese NIKKEI slipped over 2% on Friday hitting a six-week low thanks to disappointing earnings and a rising yen. The troubles at Toyota certainly weighed on investor sentiment. For the month the NIKKEI fell 3.3% versus a 12.9% rally in December. In Hong Kong the Hang Seng lost 1.1% with its worst monthly performance in a year. The Hang Seng is trying to hold support at its simple 200-dma. The Chinese Shanghai index lost 0.16% on Friday and lost 8.8% for the month of January.
European markets saw a bounce as Greek and EU regulators voiced consent that they would work together to avoid a Greek debt default. Investors are still nervous about Greece, Italy, Ireland, Spain and Portugal, which is driving the euro lower and lifting the dollar. The English FTSE rose 0.8%. The German DAX gained 1.2%. The French CAC-40 rallied 1.3%.
The big story today in the states was the fourth-quarter GDP report. Economists were estimating +4.7% growth. The Commerce Department came out this morning and reported +5.7% growth, the strongest pace in six years. For all of 2010 analysts are projecting +2.7% growth. The Chicago Purchasing Managers Index (PMI), also referred to as the Chicago ISM data, came in better than expected. Economists were predicting a drop from December's 58.7 to 57.2. The PMI was surprisingly positive with a jump to 61.5, the best reading since 2005. Readings over 50 indicate growth and expansion. The employment component of the index rallied from 47.6 to 59.8 while the new orders component rose from 64.4 to 66.4.
Meanwhile the Labor Department issued some sobering data on U.S. wages and benefits. For 2009's fourth quarter employee wages only rose 0.5%. For all of 2009 wages rose 1.5%, which is the worst growth rate since 1982. The concern here is a lack of wage growth will inhibit consumer spending, which accounts for 70% of the U.S. economy.
We had a wave of high-profile tech earnings last night with AMZN, MSFT and SNDK. All of them were better than expected and yet investors are selling the news. MSFT beat earnings estimates by a penny and saw revenues rise 14.4% to $19.02 billion versus estimates of $17.8 billion. The company sold over 60 million copies of Windows 7, which was a record-breaking sales pace. Yet investors seemed to be worried that business sales are slow. MSFT is off 3.3% and trading under its 100-dma. AMZN beat earnings estimates by 13 cents and revenues soared +42% to $9.52 billion with gross margins coming in better than expected. Yet AMZN is only up 1.4% on the day and off its best levels. SNDK crushed the earnings numbers with $1.18 per share versus $0.69 estimates. Revenues and gross margins were way above estimates. Yet shares of SNDK are getting hammered for a 12% decline today.
Currently the market is trading near its lows for the session. The SOX semiconductor is breaking down. The NASDAQ is breaking under its 100-dma. There is no bounce in the transports. There are a few select sectors that are bouncing but for the most part it's a down day on Wall Street.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
Glancing over the OptionInvestor.com play list I see that there was no bounce in shares of QCOM. GYMB is up 2.1% but still under resistance at $40. SI is trading down toward $90.00.