Daily State of the Markets: Correction Is Over

by: David Moenning

Publishing Note: Dave is traveling with his family this week, but we've got you covered on the important news, happenings, and market-drivers in his absence.

Stocks advanced again on Friday in response to largely better-than-expected earnings news and an upward revision to U.S. Q4 GDP. The country's economic growth rate came in at +3.1%, which was above the consensus expectations for a reading of +2.8% and last quarter's +2.6%. The continuation of the rally caused the major indices to snap a two-week losing streak and caused many analysts to come to the conclusion that the recent corrective phase may be coming to a close.

The most positive aspect of the action last week was that traders moved their focus away from the headlines out of Libya and Japan, and returned to the fundamentals and macro view here at home. From a technical perspective, the bulls were able to push the indices up through important resistance zones, which allows for some backing-and-filling to occur from here without negatively impacting the charts.

While the bears will argue that there is resistance overhead and that a retest of the lows is a possibility at any time, the charts remain constructive at this point in time.

Turning to this morning ... The headlines report new radiation problems at the Fukushima Dai-ichi nuclear plant, the rebels advancing in Libya, and a defeat for German Chancellor Angela Merkel's party at a regional election in Germany.

On the economic front ... Personal Incomes rose by 0.3% in February, which was in line with the consensus expectations for an increase of +0.3%. The January level was revised higher to +1.2% from +1.0%.

Personal Spending (now called “Consumption”) for the month rose by just 0.7%, which was above the expectations of +0.5% but below January’s revised reading of +1.3%. (December: +0.5%; November: +0.4%; October: +0.7%; September: +0.3%; August: +0.5%).

The Core PCE (think inflation) came in up 0.2%, which was in line with expectations for +0.2%.

Next up is the Pending Home Sales number, which will be released at 10:00 am Eastern. But remember that the monthly Jobs report is due out on Friday.

Pre-Game Indicators

Here are the pre-market indicators we review each morning before the opening bell ...

  • Major Foreign Markets:
    • Australia: -0.17%
    • Shanghai: +0.21%
    • Hong Kong: -0.39%
    • Japan: -0.60%
    • France: -0.04%
    • Germany: -0.15%
    • London: +0.12%
  • Crude Oil Futures: -$1.09 (May contract) to $104.31
  • Gold: -$14.40 to $1411.80
  • Dollar: Lower against the yen, higher versus the euro and pound
  • 10-Year Bond Yield: Currently trading at 3.480%
  • Stocks Futures Ahead of Open in U.S. (relative to fair value):
    • S&P 500: +3.10
    • Dow Jones Industrial Average: +31
    • NASDAQ Composite: +8.10

Wall Street Research Summary


  • Ilumina (NASDAQ:ILMN) - Auriga
  • Walter Energy (NYSE:WLT) - Goldman Sachs
  • Nokia (NYSE:NOK) - Goldman Sachs
  • Alcatel-Lucent (ALU) - Goldman Sachs
  • NVIDIA (NASDAQ:NVDA) - JMP Securities
  • Freeport-McMoRan (NYSE:FCX) - Morgan Stanley
  • American Tower (NYSE:AMT) - Morgan Stanley
  • SBA Communications (NASDAQ:SBAC) - Morgan Stanley
  • Leap Wireless (LEAP) - RW Baird
  • AT&T (NYSE:T) - RW Baird
  • Verizon (NYSE:VZ) - RW Baird
  • Parker Drilling (NYSE:PKD) - Wells Fargo


  • Peabody Energy (BTU) - Goldman Sachs
  • Marriott (NYSE:MAR) - Goldman Sachs
  • Northern Trust (NASDAQ:NTRS) - Morgan Stanley
  • L-3 Communications (NYSE:LLL) - Oppenheimer

Long positions in stocks mentioned: BTU