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Banks Pass Stress Tests and Stocks Fly


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

The S&P 500 shook off weak retail sales data and staged an impressive rally, fueled by bank stocks.

Retail sales fell 0.6% in February, the third straight month of decline. Economists had forecast a 0.3% gain.

Excluding autos and gasoline, sales fell -0.2%, but like the headline number, this was well below consensus.

Weekly jobless claims were above expectations at 289,000, while business inventories came in below.

Financial stocks outperformed after the Federal Reserve announced mostly positive results in its latest round of stress tests. Citigroup (C) emerged with the best resusts, and the company announced a $7.8 billion share repurchase program and a dividend increase. Many other major banks, including JP Morgan (JPM) and Morgan Stanley (MS), also announced capital return programs.

The Financial Select Sector SPDR ETF (XLF) rose 2.2% today.

In the morning, semiconductor giant Intel (INTC) cut first-quarter guidance due to weak PC demand and unfavorable macroeconomic trends. The company now sees first-quarter revenues of $12.5-$13.1 billion, the midpoint of which is 7% below the consensus analyst estimate of $13.7 billion.

The ensuing weakness in semiconductor stocks resulted in slight underperformance for the NASDAQ Composite, which returned 0.9% vs. the S&P 500's 1.3% gain.

Both, however, were outshined by the Russell 2000, which rose an impressive 1.7% to finish at 1236.61.

Crude oil fell as traders remain worried about a supply glut. Energy stocks were the day's worst performers.

On the global macro front, the US dollar fell against most foreign currencies today, providing a day of respite following the recent big rally.

China was a standout performer as aggregate financing beat economists' forecasts for February by a wide margin. The Shanghai Composite rose 1.78%.

And finally, South Korea's central bank announced a surprise cut in its seven-day repurchase rate, taking it down to 1.75%.

Friday's Financial Outlook

All eyes will be on the February PPI report, which will be released at 8:30 a.m. ET. Economist are expecting a 0.3% month-over-month price increase following January's 0.8% decline.

At 10:00 a.m. ET, the preliminary March University of Michigan Sentiment Survey will be released.

Overseas, we'll see Japan industrial production, Great Britain construction output, and Canadian employment data.

There are no major earnings reports on the calendar.

Twitter: @T3Live
No positions in stocks mentioned.
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