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Russell 2000, Energy Stocks Power Higher on Strong Economic Data


Today's financial recap and tomorrow's financial outlook.

Stocks rose Thursday as traders embraced better-than-expected US economic data.

October Existing Home Sales were 5.26 million vs. the 5.15 billion consensus, while September's number saw a slight upward revision.

The Philly Fed Index was 40.8, blowing away the consensus of 18.5, and representing the highest reading since December 1993.

October CPI was 1.7%, exceeding the 1.6% average Wall Street forecast. A weaker-than-expected reading may have rekindled deflation fears, so this beat gave the bulls some relief.

Weekly jobless claims were 291,000, slightly above the 284,000 expected.

Global data was on the weak side, as PMI numbers from China, the Eurozone, German, and France were below expectations.

Shares of index leader Apple (AAPL) traded 1.4% higher after Piper Jaffray analyst Gene Munster raised his target price to $135 from $120 while reiterating an Overweight rating. Plus, Morgan Stanley (MS) came out and said first-year Apple Watch sales would come in at or above the high end of Wall Street's current expectations, adding to the optimism.

Chinese Internet giant Alibaba (BABA) rose 0.9% to $109.82 after a news report indicated extremely strong demand for its bond offering. According to Bloomberg, investors have placed $57 billion worth of bids for the approximately $10 billion in bonds Alibaba is thoguht to be selling.

Action camera maker GoPro (GPRO) was down 9.3% to $71.73 after pricing of its secondary offering disappointed.

And Best Buy (BBY) powered 7.0% higher to 38.02% on a solid earnings beat.

But even with the large quantity of tech news on the tape, the big story today was energy, which outperformed all the S&P 500 (SPX) sectors. Driven by a spike in crude oil prices, the Energy Select Sector SPDR ETF (XLE) rose 1.3%. Some traders are speculating that OPEC could cut production next week, which would be supportive of crude.

And in a reversal from recent action, small caps saw significant outperformance, with the Russell 2000 rising 1.1% vs. the S&P's 0.2% gain.

Tomorrow's Financial Outlook

The economic calendar will slow down tomorrow. The only US data release will be the Kansas City Fed report at 11:00 a.m. ET.

Canada will release its October CPI report at 8:30 a.m. ET.

In Europe, ECB President Mario Draghi will speak in Frankfurt, and odds are traders will be paying close attention for any possible updates on monetary policy.

The action remains tough hard to gauge on a short-term basis as the S&P 500 has been stuck in a tight trading range this week, similar to what we saw last week. An expansion in volatility seems inevitable, but the direction remains hard to gauge.

Twitter: @Minyanville

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No positions in stocks mentioned.

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