EmailAfter three days and a total of nineteen-and-a-half hours of trading, the S&P 500 is up 0.58 points for the week. All things considered, that is a strong move.
The basis for that view is the understanding that the S&P 500 was up 3.2% since the start of the year entering the week. So far, there hasn't been any rush to take profits.
That stance persists today. The S&P futures are pointing to a higher start for the cash market.
It is a resilient indication considering Bank of America (BAC) and Citigroup (C) are expected to open lower after releasing their earnings results. In turn, Boeing (BA) remains under pressure with the FAA now issuing a formal order for all 787 planes to be grounded pending a safety review.
A bevy of financial companies have reported their results this morning. By and large, most of them beat the Capital IQ consensus earnings estimate and showed little, if any, expansion in net interest margins.
Bank of America beat by a penny, but came up short on revenues in a report that can be thought of as noisy given all of its moving parts (picture a one-man band making inharmonious music). Citigroup for its part fell short of the Capital IQ consensus estimate by $0.27.
The market, however, has been undeterred by any negative news. It has stood its ground, not just today, but all week and ever since the income tax rate deal was struck to avert the full force of going over the fiscal cliff.
It is garnering some added support today from positive headlines on the economic front.
First, weekly initial claims declined by 37,000 to 335,000 (Briefing.com consensus 370,000) for the week ending January 12. That is a positive deviation from the 350,000 - 400,000 range in which initial claims have been bounded for most of the last year.
Unfortunately, the initial claims number can't be taken at face value. The Labor Department has indicated that there are problems with seasonal adjustments, noting the difficulty in adjusting for claims that often pick up in early January following the end of the holiday selling season.
Continuing claims for the week ending January 5 increased by 87,000 to 3.214 mln (Briefing.com consensus 3.100 mln).
The more determinate number today is the housing starts number for December. It was a good one. Starts increased 12.1% to a seasonally adjusted annual rate of 954,000 (Briefing.com consensus 889,000), which is the highest level since June 2008. Notably, there was an increase in starts across every geographic region.
Building permits rose a more modest 0.3% to 903,000, but remain on an encouraging forward-looking trend.
The S&P futures were up about a point in front of these releases, but are now up seven points and are trading 0.4% above fair value.
The pieces are in place seemingly to extend the breakout to multi-year highs for the S&P 500. How far it gets in the near term will likely be dictated by the trading disposition of the financials and a certain stock named Apple (AAPL).
