Following yesterday's increased bullish sentiment, US stocks continued to rally throughout the entire trading day. In the pre-market, durable goods orders showed a larger-than-expected drop to -5.2% month-over-month from last month's gain of 3.7%, but the true strength came from the 1.9% increase after stripping out aircraft and transport orders. Later in the morning, pending home sales showed a strong month-over-month 4.5% jump, much more than the 1.9% estimate, and the prior month saw a large revision higher to -1.9% from -4.3%. The Dow Jones Industrials made new 52-week highs, up 1.26% to 14,075.37.
Treasuries maintained their relative strength against equities and the 10-year yield only rose 1bp to 1.8980% by 4 p.m. ET. The Treasury auctioned off $29 billion of 7-year Treasuries at am average yield of 1.260% with a slight downtick in demand from previous auctions.
Ben Bernanke gave testimony to the House Financial Services Committee today with no change in his speech from yesterday's testimony to the Senate.
Across the pond, the Italian election show continued to go on. De facto winner Bersani is seeking to create a coalition that would allow the Italian parliament to be officially formed on March 15. His opponents, Berlusconi and Grillo, are constructive or outright against forming a coalition with him, which could lead to a hung parliament.
Tomorrow's Financial Outlook
Tomorrow there will be a lot of economic data released. Weekly initial jobless claims, continuing claims, and the second revision of 4Q GDP are scheduled for 8:30 a.m. ET. On the GDP front, the first revision of the 4Q GDP showed an annualized decrease of 0.1%. Since we have received some more data since then, it is likely that this growth reading should tick up into positive territory. On the claims front, economists forecast claims to continue to trend around their 4-week moving average of 360,000. Lastly, the Chicago Purchasing Manager Index is expected to decline modestly to 54.1 in February from 55.6 in January.
On the global front, it will also be a robust day. Consumer inflation is expected from the broader eurozone and Switzerland. There is also more data scheduled out of Japan in the former of unemployment and housing starts. As the JPY has been a risk asset leader recently, this data will be most important to watch.
On the earnings front, Barnes & Noble
(BKS), Ocwen Financial
(OCN), Sears Holdings
(GPS), Kodiak Oil & Gas
(CRM), Palo Alto Networks
(SPLK), and Molycorp
(MCP) will all report.
No positions in stocks mentioned.
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