The U.S. market is seeing a relief rally on hopes for a resolution to the Greek debt problem. Oddly enough the European markets sold off on the exact same news. Euro strength produced dollar weakness, which is lifting commodities. Crude oil is up 1.1% near $75.35 a barrel. Gold futures are up $17 to $1,093 an ounce.
Asian markets were higher. China released their consumer price index (CPI) reading for inflation in January. Economists were expecting a rise from 1.9% in December to 2.0%. China's National Bureau of Statistics said January CPI decreased to 1.5%. This is good news as it eases concerns over an interest rate hike to slow down inflation. The Hong Kong Hang Seng rose 1.8% stretching its gains to three days in a row. The Chinese Shanghai only gained 0.1%. The Japanese market was closed today.
European markets were mixed but the trend was down. Bank stocks dropped on the EU plans for Greece and stocks erased early gains to close lower. The French CAC-40 fell 0.5%. The German DAX dropped over 1%. The English FTSE actually rose 0.1% (note: England is part of the 27-member European Union but not part of the 16-member Eurozone, which uses the euro currency).
Details were hazy for the EU's new rescue plan for Greece. EU leaders held a special summit on the economy early Thursday and the sound bites coming out of the meeting were all positive regarding a resolution for Greece. However, they seemed to be more "we will do something" to save Greece versus "this is what we will do". According to press reports the deal was led by Germany in an effort to save the euro-zone and bring Greece's budget deficit under control. Details on this aid package are not expected until next week.
So we don't know what this deal entails but you can bet the markets are now expecting Portugal and Spain to be next in line for help. Many analysts believe that the euro could suffer as Europe muddles through this debt problem, which could keep the dollar strong versus the euro on a longer-term basis. I would expect the euro to see an oversold bounce but the trend is still down.
Here at home the only economic data out was the weekly initial jobless claims. The Labor Department said weekly claims fell 43,000 to 440,000. Economists were only expecting a drop to 465,000. This was a welcome surprise.
In corporate news headlines were dominated by earnings from Activision (ATVI) and Phillip Morris (PM). ATVI reported earnings last night that were 5 cents better than expected. Revenues were significantly lower than expected and the company actually guided lower for the first quarter. Yet the stock is soaring with a 9.8% gain on a move over $11.00 a share. Meanwhile PM is up 4.1% and breaking out over its 50-dma on a stronger earnings report. PM beat estimates by 2 cents with revenues coming in significantly better than expected. PM management also announced a $12 billion stock buyback program.
Currently the S&P 500 has rallied toward short-term resistance near the 1080 level. The NASDAQ Composite is up 1.3% and challenging technical resistance at its 100-dma. The DJIA is up almost 1% near 10,140. The small cap Russell 2000 index is up 1.0% and breaking over the 600 level.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
The market-wide bounce is lifting most of the stocks on our play list. FCX is really outperforming with a 4.6% gain and a move over $74. TEVA is finally showing some life with a 2.6% gain and a new short-term, relative high. AAPL is testing the $200 level. INFY has hit our new trigger to buy puts at $53.90. MHS is about to hit our trigger for puts at $62.75.