The March rally continues as major U.S. indices rise to new 52-week highs. Better than expected weekly jobless claims and a possible solution to the Greece debt problem helped propel stocks higher. Plus positive comments out of Best Buy and Qualcomm helped fuel bullish investor sentiment. Strength in Europe lifted the euro, which dragged on the dollar. Crude oil is up about 1% near $81.40 a barrel. Gold futures are up almost $3 to $1,091.70 an ounce.
Asian markets were mixed with Chinese stocks down as investors reacted to the Portugal downgrade from Wednesday. The Chinese Shanghai index fell 1.2% and closed near round-number support at the 3,000 level. The Hong Kong Hang Seng lost 1.1% to close near 3-week lows. Meanwhile weakness in the yen helped fuel gains for Japanese stocks and the NIKKEI closed up +0.15%. Elsewhere the Indian market rallied sharply late in the session after trading in negative territory most of the day.
It was a much brighter story in Europe with banks leading the way as concerns eased over Greece default risk. Positive news about the Dubai World restructuring added to the bullish tone. The big story in Europe was word that Germany and France had finally come to agreement on a bailout deal for Greece. French president Sarkozy appears to have given into demands by German chancellor Merkel that any bailout program for Greece and any other nations needing help in the EU would involve the IMF.
Anonymous sources are claiming the two largest EU members are closing in on a deal to offer nearly 22 billion euros in aid to Greece via the IMF and bilateral loans. The mere suggestion that these two nations are also preparing for additional bailouts beyond Greece is an interesting development. The worry has been that a default by Greece would be followed by defaults in Spain, Italy, Ireland and Portugal. Details are unavailable as the two-day meeting with EU finance ministers and heads of state just began in Brussels today. The euro currency was bouncing on this news while major market indices were rising to new 17-month highs. The French CAC-40 gained 1.2%. The German DAX rallied 1.5%. The English FTSE is up +0.88% (England is not part of the eurozone).
Here in the U.S. investors were happy to see that the weekly jobless claims came in better than expected. Economists were looking for claims to fall from 457,000 to 450,000. This morning the Labor Department said new claims sank to 442,000. The four-week moving average, which smoothes out volatility, has fallen to 453,750, which is the lowest level since September 2008. Unfortunately, stubbornly high unemployment remains a problem. That is what Federal Reserve Chairman Ben Bernanke was telling the House Financial Services committee (again) this morning. He reinforced his prior comments that the Fed would need to keep rates low for an extended period until the recovery had matured.
Meanwhile bullish earnings news and forecasts out of Best Buy and Qualcomm fanned the flames for this rally. Investors have been very nervous about the state of the consumer since consumer spending accounts for nearly 70% of the U.S. economy. Thus today's earnings report and comments from Best Buy (BBY) were very comforting. BBY beat Wall Street's estimates by 3 cents a share with revenues coming in at $16.55 billion compared to estimate for only $16.08 billion. BBY's management also raised guidance going forward. In the technology space Qualcomm (QCOM) came out and raised their Q2 earnings guidance to the 56-58 cent range versus analysts estimates at 53 cents. Shares of BBY and shares of QCOM are both up 5.2% but off their best levels of the day.
Most of the major U.S. indices are hitting new 52-week highs with today's rally. The S&P 500, NASDAQ composite, and small cap Russell 2000 were are all up about 1% but have since begun to slide in the last 15-minutes. The DJIA is up 0.8% and breaking out above the 10,900 mark. The best performers are homebuilders (+2.2%), retail (+1.8%), banking stocks (+1.7%), Internet (+2.0%), and railroads (+1.4%). The worst performers today are the energy stocks with oil, oil services, natural gas and utilities all in negative territory.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index: