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Midday Market Report

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US economic outlook gets gloomier; Greece soldiers on.

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The US saw a flurry of weak economic news today. The S&P/Case-Shiller index showed that the housing market still hasn't hit bottom. House prices in the 20 cities in the composite fell by 1.3% from November, a full 3.7% down from December 2010.

Consumer and business confidence is also flagging. The Consumer Confidence Index ticked down to 61 from 64.8 one month earlier. The Institute for Supply Management-Chicago's business barometer fell from 62.2 to 60.2 (numbers above 50 indicate that more businesses report worsening conditions than report improving conditions). None of this bodes well for the short-term health of the US economy.

US stock indices also suffered. The Dow (^DJI), NASDAQ (^IXIC), and S&P 500 (SPY) lost even more ground today after an early rally. At pixel time, the Dow lost 40.56 pts (-0.32%), the S&P is down 2.72 pts (-0.20%), and the NASDAQ lost 2.51 pts (-0.09%). This drop is the S&P 500's longest since November. Goldman Sachs (GS) led the financials up today, gaining 1.43% versus 0.37% sectorwide. ExxonMobil (XOM) lost 2.01% after posting lower-than-expected earnings, helping bring down the energy sector by 0.11%

Bond investors are clearly favoring shorter-term bonds since the Federal Reserve reiterated its intention to keep interest rates on the floor until 2014. Yields on 10-year Treasury bonds fell 2 basis points to 1.82%.

Gold is rallying with futures up 0.3%, 11% for the month. Silver has gone up 19% so far this month.

Meanwhile, in Europe.....

A few bits are out regarding the private creditor debt swap in Greece. Greek Finance Minister Evangelos Venizelos reaffirmed that Greece will come to an agreement with its creditors by February 13.

Venizelos also notes that there will be a 70% net present value (or NPV) writedown from current value, which is in line with Greek bonds that currently trade between $0.20 and $0.30 on the dollar. The coupon is expected to be between 3.6% and 3.7% on a newly issued 30-year note, which is between the previously reported 3.5% and 4.0%.

And German unemployment fell to its lowest level in 20 years.

Twitter: @vincent_trivett
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No positions in stocks mentioned.
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