Home price data and earnings results this morning were all better than expected. Yet stocks are rolling over under a very disappointing consumer confidence report. Consumers' outlook on current conditions has fallen to a 27-year low. Meanwhile retailers remain cautious on their outlook for sales growth. Overall investors seem a little nervous ahead of Federal Reserve Ben Bernanke's testimony later this week. The dollar's strength is weighing on commodities. Crude oil is off 1.7% near $78.90 a barrel. Gold futures are down almost $10 near $1,104 an ounce.
Asian markets were mixed. The Chinese Shanghai market continues to slide with a 0.69% loss. Yet the Hong Kong Hang Seng continues to bounce with a 1.2% gain. The Japanese NIKKEI index gave up 0.47% on very low volume. Toyota continues to make headlines. The company is facing two days of congressional hearings as regulators accuse the company of misleading statements.
The profit taking continues in Europe. Stocks were down across the board after traders sold the early morning rally. The IFO institute in Germany released their business climate index. The company surveys 7,000 companies the general consensus has turned pessimistic with the business climate index falling from 95.8 to 95.2. The current conditions component of the IFO survey fell from 91.2 to 89.8. A little farther south the Greek stock market fell 1.8% after Greece's four largest lenders were all downgraded by the Fitch credit rating agency. The German DAX fell 1.48%. The French CAC-40 lost 1.54%. The English FTSE lost 0.69%.
The big story today was the Conference Board's reading on consumer confidence. Economists were expecting a reading of 55.0. Yet the consumer confidence number fell from a revised 56.5 in January to 46.0 in February. This is a huge reversal and definitely shows how fragile the consumer is. Normally a reading of 90 or more indicates a healthy consumer/economy. The current conditions component to this index fell to a 27-year low. Consumers who felt that jobs were plentiful dropped from 4.4% to 3.6%. Expectations for the next six months dropped from 77.3 to 63.87, a new multi-month low.
The consumer confidence numbers completely overshadowed a positive report on rising home prices. The 20-city Standard & Poor's/Case-Shiller home price index inched up 0.3% from November to December marking the seventh monthly gain in a row. Home prices are up 3% off their lows but still down 30% from their May 2006 peak. According to the report the biggest improvements were in Los Angeles and Phoenix.
We had a small parade of earnings from the retail sector today with Home Depot (HD), Macy's (M), Sears Holdings (SHLD), and Target (TGT) all reporting this morning. For the most part these major retailers beat Wall Street's profit expectations but management was cautious on sales growth going forward. HD beat estimates by 7 cents with a profit of 24 cents a share on revenues of $14.57 billion. This revenue number beat expectations. HD's management actually guided higher. Macy's beat estimates by 8 cents with a profit of $1.40 a share with revenues that were only in-line with estimates. The company did point out that online sales surged 26.6% in the fourth quarter but this remains a very small part of the business.
Sears Holding, which includes Sears and K-mart, beat estimates by 15 cents with a profit of $3.69 a share. Revenues came in at $13.25 billion versus estimates at $12.9 billion. SHLD said comparable store sales for the combined company fell 2.5% last quarter. Meanwhile rival Target delivered a profit of $1.24 a share, which was 8 cents better than expected. Revenues missed expectations at $19.72 billion for the quarter. TGT did say comparable store sales came in better than expected and gross margins improved by 1.8%. In spite of the positive results the RLX retail index is down 0.4% on the session.
Currently the S&P 500 is off 1.2% and breaking down under the 1100 level. The NASDAQ is off 1.4% and falling back under its 50-dma. The Dow Industrials are off 0.8% with a drop back under 10,300. The Russell 2000 is down 1.2% with a drip toward its 40-dma. The worst performers today are tech stocks, banking stocks, oil and oil services, homebuilders, and the mining sector.
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A quick glance at the OptionInvestor.com play list reveals that AZO is showing some relative strength. Shares of SINA are correcting and have hit our trigger to buy calls at $36.50. AAPL is down 1.8% and breaking support at its 100-dma. This looks like a new entry point to buy puts on AAPL. MCK is accelerating lower with a 2.6% decline. SI is also under performing with a 2.3% drop.