Positive earnings news fueled gains around the globe. Better than expected economic data in the U.S. was welcome news. Yet the dollar's bounce is putting the brakes on the commodity bounce. Stocks appear to be losing steam as we move deeper into the session with the S&P 500 up less than five points at 1,097. Crude oil futures are up about $0.25 after yesterday's big gain. Gold futures are trading fractionally lower, down less than a $1.00 at $1,118.90 an ounce.
Asian markets were positive. The Chinese Shanghai market is still closed for holiday but the Hong Kong Hang Seng re-opened and rallied sharply with a +2.0% gain intraday before settling at +1.1%. The Japanese markets were showing lots of strength and the NIKKEI index closed up 2.7% but volume was very low.
The rally continues in Europe with banks leading the way. Yesterday earnings news from British bank Barclays fueled the rally. Today it was earnings from French bank BNP Paribas that came in better than expected. The French CAC-40 index rose 1.5%. The German DAX gained 1.0%. The English FTSE added 0.6%, marking its third gain in a row.
Here in the U.S. the industrial production numbers and housing construction data shed some positive light on the economy. Economists were expecting industrial production to come in +0.6%. The Federal Reserve announced this morning that January's industrial production rose 0.9%, its seventh monthly gain in a row. All three segments, energy utilities, manufacturing, and mining rose last month. Manufacturing turned in the biggest improvement with a 1.0% gain in January compared to a 0.1% loss in December.
Meanwhile the Commerce Department said the construction of apartments and homes rose to a seasonally adjusted annual rate of 591,000 in January. That's better than the 580,000 estimate and up 2.8% from the previous month. Analysts are hoping that the construction sector will recover quickly from one of the worst slumps in decades. The number of applications for building permits, normally seen as an indication of future business, declined 4.9% in January to 621,000 but this followed two months of hefty gains and a pullback was expected.
In corporate news Dow-component Deere & Co (DE) reported stronger than expected earnings. Wall Street was looking for a profit of $0.19 a share. DE delivered earnings of $0.57 cents with revenues numbers also beating expectations. DE's management raised guidance for the second quarter and the full year. Shares of DE gapped open higher and spiked to $58.05 but have since pared their gains and are trading near $56.24 (+4.5%).
The major U.S. indices are still in positive territory but they're off their best levels of the session. The S&P 500 index is testing resistance at the 1100 level. The NASDAQ composite is testing resistance at its 50-dma. The Dow Industrials are trying to breakout past their early February highs. While the small cap Russell 2000 index is extending its run to six gains in a row. The market's best performers are biotech (+1.8%) and healthcare (HMO index +3.0%). The worst performers are banks, energy, miners, railroads, and homebuilders.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
I am not seeing a lot of movement today on the OptionInvestor.com play list. Although shares of FCX look like they might be reversing with a mini bearish engulfing candlestick pattern today. Shares of SHLD are out performing with a 2.5% gain and a move over $95.00. Shares of X hit our first target at $51.75. There is no follow through on AAPL's bounce from Tuesday. MHS is breaking out past its 50-dma, which is a signal to exit any put positions.