Positive Economic Data Ignored By Investors Today
The market is lower in early trading despite some stronger than expected economic data. Yesterday, a news story surfaced that said Greece had taken the first steps toward shoring its finances by agreeing to a 5-year austerity plan with the EU and IMF. That news led to a big rally in our markets, pushing the Nasdaq well into positive territory.
The news also helped Asian markets rally overnight, and European markets gain this morning. So its a bit odd that our markets are down this much.
In economic news, Q1 GDP was revised a bit higher to +1.8%, above expectations. Also, durable goods for May came in better than expected at 1.9%, which is good news.
And oil prices remain lower after yesterday's big drop, currently hovering below the $91 level. Gold prices are also lower near $1509.
It seems that the current soft patch in the economy is causing worries about how much it will affect corporate profits. Recently, earnings estimates have held up very well, but I think concern is growing that we might see some estimate reductions.
Last nights earnings reports from Micron (MU) and Oracle (ORCL) were disappointing to the market, and the stocks are lower today.
The 10-year yield is lower to 2.88%; and the VIX is higher by 8% to 20.82.
Trading comment: The S&P 500 staged another successful test of its 200-day average and bounced higher from it. The 200-day currently sits near 1263, so it bears watching. But it looks like the market is chopping around these levels without really breaking down further. That could give stocks a small base from which to stage a bigger bounce. At least that's the bullish scenario as long as things don't fall apart with respect to Greece. Stay tuned.