Friday is shaping up to be a quiet session but for the most part stocks are in positive territory. Stronger GDP and ISM data overshadowed unexpected declines in consumer sentiment and existing home sales. Meanwhile strength in the euro pushed the dollar lower and that's fueling gains across most of the commodity sector. Crude oil is up 2% near $79.80 a barrel. Gold futures are up over $10 to $1,118 an ounce. Silver and copper are up strong as are many of the grain futures.
Stocks were mostly higher in Asia. Japan's industrial output came in stronger than expected with +2.5% growth in January compared to economists' estimates for +1.0%. The Japanese NIKKEI only managed a +0.24% gain on another very light volume day. The Hong Kong Hang Seng rose 1.0% while the Chinese Shanghai fell 0.28%.
The situation was a lot more exciting in Europe. Stocks opened higher and were positive most of the session. There was a sharp dip on the U.S. economic data but traders quickly jumped in to buy the dip and stocks rebounded sharply higher into the close. Most of the major European markets erased Thursday's big losses. The German DAX gained 1.2%. The English FTSE rose 1.45%. The French CAC-40 rallied 1.87%.
Here in the states investors were surprised to see the 2009 fourth-quarter GDP revision come in stronger than expected. Economists were looking for Q4 GDP to remain unchanged at +5.7% but the Commerce Department said the country grew at a +5.9% pace. Most of the gains were fueled by a big surge in manufacturing and exports. Exports rallied 22.4% to their fastest pace in 13 years. Unfortunately most analysts are expecting the Q1 and Q2 to see growth pull back toward the +3% range. The second positive report today was the Chicago ISM data, or Chicago PMI index, which beat analysts' expectations for a drop to 59.7. The Institute for Supply Management said the Chicago area business barometer rose from 61.5 in January to 62.6 in February. Readings over 50 indicate growth.
The markets were also surprised to see negative readings for consumer sentiment and home sales. The preliminary February consumer sentiment numbers came in at 73.7 and analysts were expecting a rise to 74.0. Unfortunately the latest reading has seen a drop from January's 74.4 to 73.6 in February. Nearly 70% of the U.S. economy is consumer spending and if the consumer is feeling cautious they're going to cut back on purchases, which keeps the economy on fragile footing.
Personally I am not surprised to see existing home sales fall. Earlier this week new home sales plunged to their worst levels on record. The National Association of Realtors just announced that existing home sales also declined by 7.2% to an annual pace of 5.05 million. Economists were expecting a rise to 5.5 million. As foreclosures continue to flood the market place prices have stalled in spite of what the recent Case-Shiller index might say. The median sales price came in at $164,700, which is down 3.4% from December. The recent snow storms are only going to make these numbers worse although it's possible there might be a last minute rush as buyers try to get in before the current tax credit expires in April. The real question is what happens to the real estate market when this tax credit does expire because the foreclosures are not going to slow down.
Currently the S&P 500 index is up fractionally near the 1105 level and off its worst levels of the day. The NASDAQ is drifting sideways with a minor gain. The Dow Industrials are also up a minor amount and hovering near 10,300. The same can be said for the small cap Russell 2000 with a minor gain toward the top of its bull-flag consolidation pattern. Surprisingly the best performers are the airlines with a 2.8% rally in the XAL index in spite of thousands of cancelled flights due to weather on the east coast today.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
A quick scan of the OptionInvestor.com play list doesn't reveal any big movers. Our candidates are drifting sideways with the major market averages.