Friday afternoon the market recovered from deeply oversold conditions and continued to rally throughout the day today. By 8 a.m. EST, S&P 500 futures had risen 9 points or about 0.66%. As the market opened, steady buyers came into the market and this buying continued throughout the day. The S&P 500
(INDEXSP:.INX) finished the day up nearly 2%. In economic data, the NAHB Housing Market Index -- a gauge of homebuilder confidence -- rose to 46 from last month's 41, well ahead of economist estimates of 41, and the highest point since 2006.
European indices also rose sharply. The Spanish IBEX closed the day up 2.31% and the Italian FTSEMIB closed up 3.05%. This is despite Spanish bad bank loans -- loans with a "doubtful" state of repayment -- which rose to 10.7% of all loans, up from last month's 10.5%.
Much of the buying in US equities was attributed to the huge jump in Apple
(NASDAQ:AAPL). Since making an intraday low at $505 last Friday at noon, Apple has risen over 12%, accounting for the majority of the market rally. The rally in Apple is very significant because it has not been influenced by any news to speak of.
Brent crude oil futures continued to climb amidst tensions between Hamas and Israel. While past skirmishes between the two have never resulted in any supply disruptions, the premium for geopolitical tensions causes the price to rise.
Tomorrow's Financial Outlook
Tomorrow EU finance ministers will meet to further discuss the cash gap that faces Greece and any further enhancements to the proposed European fiscal union and an ECB-backed bank regulator. So far, conflicting news reports have indicated that it is both possible and impossible to resolve the funding gap for Greece, depending upon which country you talk to.
Federal Reserve Chairman Ben Bernanke will give a speech to the Economics Club of New York tomorrow. Undoubtedly, some clues may be gleaned from the speech on future Fed policy surrounding the December meeting.
In US economic data, housing starts and building permits will be released in the morning. Last month, starts and permits showed a large jump from the prior month; if the data from this morning is any guide, a similar jump this month is possible. The bigger decision of the day is from the Bank of Japan. Because Japanese political leadership is changing over the next month toward a more dovish stance, it is very likely that we will see additional easing from the central bank.
In earnings, Campbell Soup
(HPQ), Best Buy
(BBY), and Salesforce.com
(CRM) will report.
No positions in stocks mentioned.
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