The stock market continues to climb. The S&P 500 index is inching closer to its 52-week highs from last week near the 1170 level. Traders are finally taking some money off the table in healthcare stocks with the HMO index off 0.8%. European markets turned hopeful again on a possible solution for Greece. Meanwhile commodities are ignoring dollar strength. Crude oil is up about 25 cents to $81.85 a barrel. Gold futures are up more than $4 to $1,103 an ounce.
Foreign markets were mixed. It was a quiet session in Asia. The only real headline was the story about Google shutting down their Chinese search website and redirecting all traffic to their Hong Kong website. Google is no longer filtering their Chinese searches so it's up to the Chinese government to use their own firewall to filter search results. The Chinese Shanghai index lost 0.7%. The Hong Kong Hang Seng gained +0.26%. The Japanese NIKKEI lost 0.47%.
European stocks were in rally mode with most of the major indices hitting 17-month highs. An anonymous source is claiming that Germany and France, the EU's two largest economies, are coming together on a deal to support IMF aid to Greece. This news comes ahead of the two-day March 25th EU summit in Brussels to discuss solutions to Greece's debt problems. The German DAX rose +0.5%. The French CAC-40 rallied +0.6%. The English FTSE gained +0.5%.
In the U.S. the only significant piece of economic data was the existing home sales from the National Association of Realtors. Economists were expecting sales to fall to a seasonally adjusted pace of 5.0 million homes. The NAR said February existing home sales came in at 5.02 million. The report is better than expected but sales still fell for the third month in a row. Industry experts were disappointed that the situation hasn't improved. The government's extension of the home-buyer tax credit doesn't seem to be having much affect. The median price of a previously owned home fell 1.8% from $168,200 a year ago to $165,100.
One of the biggest concerns about the residential real estate market is inventory - it continues to grow! February saw inventory surge 312,000 homes in just a month. This was the biggest increase since April 2008. At the current sales pace we have an 8.6 month supply of homes. Normally a 6-month supply is considered normal. NAR economist Lawrence Yun expressed concern that if inventory reaches beyond a 10-month supply it would produce faster price declines and suggest we haven't seen the bottom yet for the housing market.
Elsewhere in the news investors seemed to be ignoring Treasury Secretary Tim Geithner's testimony before congress regarding the government's role in Fannie Mae and Freddie Mac. Most of the news in Washington was coming from the White House where President Obama was happy to sign the $938 billion healthcare reform bill into law. It looks like the fight is not over yet as 13 states have filed a lawsuit to stop the bill claiming it is unconstitutional.
Currently the market's major indices are nearing or at their recent highs. The Dow Jones Industrials hit new 17-month highs. The S&P 500 is closing in on its recent high near 1170. The NASDAQ managed a new 52-week high. The Russell 2000 is testing its high from last week. The best performers today are biotech stocks (+1.2%) and the semiconductor sector (+1.39%). The worst performers are airlines (-0.6%), homebuilders (-0.78%), healthcare (-0.8%), and railroads (-1.1%).
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index: