On Tuesday, stocks rallied on reports that Germany would lead an
effort to bail out Greece. And even though a bailout of one country
of the EU caused optimistic buying, the EU will still have to
consider problems with Spain and Portugal.
Despite the complexities of another global financial mess, the
stock rally sent the Dow Jones Industrial Average (
) to another triple-digit gain.
The Dow was helped along by an upgrade of Caterpillar (
) by Morgan Stanley (
) sending the stock up more than 2%. And another Dow component,
) rose even though it missed analysts' forecasts. An upgrade of
) by Merrill Lynch boosted the materials stocks to a 2.5%
The U.S. dollar quickly fell as the euro rallied following the
news that Germany was leading an effort on behalf of Greece.
Financial stocks in the U.S. reacted favorably to the euro news,
gaining back some of the losses of last week. But both Bank of
) and Citigroup (
) didn't participate in the gains due to a decision by S&P to
lower the rating on both to "negative" from "stable."
At the close, the Dow Jones Industrial Average rose 151 points
to 10,059, the S&P 500 (
) gained 14 points to 1,071, and the Nasdaq (
) gained 25 points to 2,151.
The NYSE traded 1.2 billion shares with advancers ahead of
decliners by 4-to-1, and the Nasdaq traded 709 million shares with
advancers ahead by 9-to-5.
March crude oil ended with a gain of $1.86 to $73.75 on the news
of a possible plan to rescue Greece. The Energy Select Sector SPDR
) rose $1.13 to $54.87.
April gold rose $11 to settle at $1,077.20 an ounce, and the
PHLX Gold/Silver Sector Index (
) closed at $155.07, up $5.73.
What the Markets Are Saying
Yesterday's rally was a welcome relief to the stock market since
the action by Germany showed that one nation was willing to take a
leadership role in the stabilization of the euro. But despite the
triple-digit rally in the Dow, the technical picture remains
Since Jan. 21, the major indices have been "stair-stepping"
their way lower, forming a bear channel with every low lower than
the prior one. Arching downward, and just 245 points above current
prices, is the Dow's 20-day moving average. And 95 points above
that is the 50-day moving average.
Meanwhile, the CBOE Volatility Index (
) jumped to the upper 20s following a run from under 20. This run
is an indication that very high volatility, along with an increase
in uncertainty, has entered the market. That combination in a
short-term uptrend can be positive, but in a correction it can be
hazardous since it often leads to markets that whipsaw from
surprise announcements and news.
In order to resolve the current dilemma, the bulls must continue
to charge ahead and surmount both the 20- and 50-day moving
averages. Today that seems unlikely, but what is clear is that the
uncertainty and volatility will likely remain high.
If you plan to buy stocks in an atmosphere like this, you had
better order a case of antacids to go along with your Wall Street
Today's Trading Landscape
Earnings to be reported before the opening
ACCO Brands, ArcelorMittal, CAE, Coca-Cola, Computer Sciences, Dean
Foods, Discovery Communications, Elan, Forrester Research,
IntercontinentalExchange, Jones Apparel Group, L-1 Identity
Solutions, Lance, Level 3 Communications, Louisiana-Pacific, Marsh
& McLennan, Max Capital Group, Medtox Scientific, NeuroMetrix,
New York Times, Northwest Pipe, Omnicom Group, PF Chang's, Scripps
Networks Interactive, Sigma-Aldrich, Sonoco Products, Sprint
Nextel, Talisman Energy, Textainer Group Holdings, TransDigm Group,
Wright Express, and Wyndham Worldwide.
Earnings to be reported after the close:
Activision Blizzard, Allstate, Amkor Technology, AptarGroup, Arris
Group, BioMed Realty Trust, Boston Scientific, Cambrex, China
Digital TV Holding, ComScore, Copa Holdings, Core Labs, CPI
International, Cray, DaVita, Deltek, Dentsply, EastGroup, Echelon,
Education Management, Encore Wire, Equinix, Everest Re Group, Glu
Mobile, GSI Commerce, Hanger Orthopedic Group, Highwoods
Properties, Insight Enterprises, Kona Grill, LivePerson, Longtop
Financial Technologies, LoopNet, Masco, Medidata Solutions,
Neustar, OraSure Technologies, PartnerRe, Penn Virginia, Plains All
America, Protective Life, Prudential, Realty Income, Sierra
Wireless, Taleo, Torchmark Corp. and Wonder Auto Technology.
Economic reports due:
MBA purchase applications, international trade, EIA petroleum
status report and Treasury budget.
Late quarterly earnings news (earnings vs.
- ACCO Brands (
): 21 cents vs. 22 cents
- ArcelorMittal (
): 68 cents vs. 27 cents
- Elan (
): 10 cents vs. 8 cents
- IntercontinentalExchange (
): $1.13 vs. $1.14
- Jones Apparel (
): 11 cents vs. 11 cents
- Lance (
): 36 cents vs. 38 cents
- March & McLennan (
): 38 cents vs. 37 cents
- NeuroMetrix (
): 8 cents vs. 8 cents
- Omnicom (OMC ): 73 cents vs. 72. cents
- Spring Nextel (
): 34 cents vs. 19 cents
- Talisman Energy (
): 7 cents vs. 7 cents
- Transdigm Group (
): 70 cents vs. 71 cents
- Wyndham Worldwide (
): 40 cents vs. 37 cents
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