Report From Europe: Stocks Sag After U.S. Jobs and Inflation Data
The Mole submits: Stocks advanced on hump day yesterday, a day after the biggest rally since November for the S&P 500 Index, as better-than-estimated earnings, industrial production and housing data bolstered confidence in the economic recovery. Deere (DE), the largest maker of farm equipment, advanced 5% after profit was boosted by lower raw-material costs. Whole Foods Market (WFMI), the biggest US natural-foods grocer, jumped 13% after raising its earnings forecast. Equities maintained gains as minutes from the Federal Reserve’s meeting last month showed policy makers debated how and when to shrink the central bank’s $2.26 trillion balance sheet. Earlier stocks in Europe climbed after results from BNP (BNPQY.PK) and Deutsche Boerse (DBOEF.PK) beat analysts’ estimates. Housing starts in the US topped the median economist estimate of 580,000, a sign that government support is helping to stabilise the real estate market. Industrial production rose 0.9% in January, more than the median forecast of 0.7%. A lack of bad news seems to be enough to raise the risk appetite with the known consequences across board in form of rising equity prices and the appreciation of high-beta currencies. But looking at the mountain of unsolved issues and the still persisting high risk that it might get out of hand at a certain point it looks as if financial markets remain in a stage of total denial. That said, the question is when are we receiving a wake up call which is loud enough not to be ignored any longer? Well, it is difficult to say what the catalyst is going to be, but from a pure charting perspective it could be a failure of the S&P 500 to surpass key-resistance at 1105 or at 1125 followed by a break below key-Fibonacci-support at 1043.Complete Story »
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