Stocks are still inching higher as investors digest earnings from the world's largest retailer. Adding to the bullish tone was a stronger Philly Fed survey. Unfortunately the LEI data was losing steam, the PPI is rising, and weekly jobless claims were disappointing. The dollar's bounce is not having much affect on oil today but gains in the metals are mild. Crude oil futures are up another 1.1% to $78.18 a barrel. Gold futures are down less than $2 at $1,118.70 an ounce.

Asian markets are still kind of quiet as investors wait for the Chinese Shanghai market to reopen next week after a weeklong holiday. The Hong Kong Hang Seng lost 0.5%. Trading was very choppy in Japan and volume remains very low. The NIKKEI managed to recover from its lows to close up 0.28% marking its third gain in a row.

European markets saw some profit taking this morning but traders are still buying the dip. J.P. Morgan Chase issued some bullish comments on the European banks, which gave the sector another boost. At the end of the day most of the European markets extended their gains to four in a row. The German DAX gained 0.6%. The French CAC-40 rose 0.68%. The English FTSE rallied 0.77%.

There was a lot of economic data out today. The big report was the Philadelphia Federal Reserve (Philly Fed) survey on economic activity for the mid-Atlantic area. Economists were expecting the index to rise to 17.0. The results this morning showed an improvement from 15.2 in January to 17.6 in February. Readings over zero indicate growth. The biggest surprise was the jump in new orders from 3.2 in January to 22.7 in February. That's the highest reading in five years. The employment component also showed signs of life.

Meanwhile the Conference Board's index of Leading Economic Indicators (LEI) is waning. The LEI is supposed to forecast future business growth January's number came in at +0.3%. Economists were expecting a decline from 1.2% in December to +0.5% in January. January's gain did mark the tenth monthly rise in a row.

One economic index that is rising quickly is the Producer Price Index (PPI), a gauge of inflation at the wholesale level. The Labor Department said the PPI surged to a seasonally adjusted +1.4% in January from +0.4% in December. Economists were only expecting a rise of +0.8%. The "core PPI", which excludes more volatile food and energy numbers, rose +0.3% versus estimates of +0.1%. Fueling this move was a big jump in energy costs (+5.1%) and an 11.5% rise in gasoline prices.

Another disappointment was the weekly initial jobless claims. The Labor Department said workers filing for new unemployment surged 31,000 to 473,000. Analysts had been expecting a decline. The unemployment picture remains a dark cloud over the markets and the recent string of rising jobless claims is worrisome.

In corporate news Wal-Mart (WMT) reported earnings while Microsoft and Yahoo received an approval for their search partnership. WMT, a Dow-component, reported fourth quarter earnings this morning. Wall Street was expecting a profit of $1.12 a share on revenues of $114.36 billion. WMT delivered a profit of $1.17 a share but on revenues of $113.65 billion. Management said same-store sales fell 1.6% versus estimates of -1%. The disappointing same-store sales and management's comments that sales in the first quarter could be "more challenging" helped send shares of WMT lower this morning. WMT now expects Q1 earnings in the 81-85 cent range compared to analysts estimates at 85 cents. The stock is trading down 1.5% near $53.25 a share.

Microsoft (MSFT), another Dow component, is up 0.45% after the European Union approved the company's search engine partnership with Yahoo (YHOO). The two are combining forces to challenge Google. Google has about 90% of the worldwide search market. Currently MSFT and YHOO combined have less than 7.5% of the market. The deal will make MSFT's Bing product the search feature for both MSFT's and YHOO's websites.

Currently the stock markets are trading sideways in a narrow range. The S&P 500 is barely positive with a fractional gain. The NASDAQ is still struggling with its 50-dma overhead. The Dow Industrials are up less than 30 points (+0.25%). The rally in the Russell 2000 has also turned sideways.

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the Dow Industrials:

Chart of the Russell 2000 index:

Scanning the OptionInvestor.com play list I see that AZO is off 2.7% thanks to some lackluster analyst comments. WYNN is trading lower as investors react to a disappointing earnings report from LVS. GYMB has finally hit our stop loss. IBM has hit our trigger to buy puts at $127.00.