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S&P Pops to a Record High, but Cracks Appear in the Facade

By: Minyanville
Posted: 2/28/2014 4:25:00 PM
Referenced Stocks: CRM;C;URS;NUS

Stocks made an all-time high Friday, but cracks rapidly appeared in the bullish facade as tensions between Russia and Ukraine heated up.

The second estimate of fourth-quarter GDP came in at +2.4%, slightly below the +2.5% consensus. Personal Consumption rose 2.6%, which missed Wall Street's +2.9% estimate.

The February Chicago PMI hit 59.8, well ahead of the 56.4 consensus.

The final February University of Michigan Consumer Confidence reading was 81.6, fractionally better than expected.

January Pending Home sales rose 0.1%, well below expectations for a 1.8% gain. That put a big damper on housing stocks, which have been among the best-performing sectors year-to-date.

S&P 500 (INDEXSP:.INX) futures were down modestly ahead of the GDP report, indicating that investors had somewhat low expectations ahead of today's data deluge. Stocks began rising at the open, even ahead of the better-than-expected Chicago PMI and Consumer Confidence numbers.

The S&P 500 hit a recrod intraday high at 1867.92 before dropping to finish at a record closing high of 1859.45, a 0.3% gain.

Aside from general profit-taking, the downward action was spurred on by geopolitics.

New leaders in Ukraine said Russian forces took control of two airports in Crimea, which Russia denied. There are also news reports of Russian troops deploying elsewhere in Ukraine. Additionally, former Ukrainian President Viktor Yanukovych, who is wanted for mass murder in Ukraine, appeared at a press conference in Russia claiming he is still in power.

However, there were some ugly spots in the action today.

Homebuilders, which have been big outperformers year-to-date, were ugly today as the January Pending Home Sales Report disappointed.

And other risk-on areas of the market such as social media, biotech, emerging markets, and small caps had solid opens before failing hard.

Indicative of the deteriorating mood, ( CRM ) reported very strong quarterly earnings numbers after yesterday's close and opened higher this morning before declining 5.8% on the day.

Citigroup ( C ) announced it was lowering its fourth-quarter and 2013 net income by $235 million following the discovery of fraudulent dealings in a Mexican subsidiary.

Bitcoin was also in the spotlight after the Mt. Gox exchange announced that it lost 750,000 Bitcoins valued at over $400 million. Later in the day, a customer proposed a class-action lawsuit in a Chicago federal court.

Tomorrow's Financial Outlook

The data storm will continue on Monday, with Personal Income and Spending, IXM Index, Construction Spending, and Auto Sales numbers all on the way.

Additionally, traders will be watching overseas markets to see if they follow the downturn in US stocks, and to gauge the potential impact of the Russia/Ukraine conflict.

There will be some companies reporting earnings -- URS ( URS ) and Nu Skin Enterprises ( NUS ) among them -- but none are likely to move the market.

Twitter: @Minyanville