Wednesday, April 11, 2012 9:08 a.m. ET
DJIA: 12,715.53 S&P 500: 1358.59
TODAY: Look for a technical rebound in the market capable of driving the DJIA back up to 12,895 (S&P 500: 1377). What’s needed is a very good Jobless Claims report at 8:30 tomorrow to help counter the jolt encountered last Friday when the Employment Situation report came in with new hires half what was expected. Suddenly, Europe’s sovereign debt woes have returned with Spain in the forefront as a new government tries to implement a tough austerity program designed to slash a budget deficit. At this moment, there is hope the ECB will start buying Spanish bonds again to counter rising interest rates. The only bright spot is Alcoa (AA) which beat estimates for Q1 earnings, but this is just one report, more to follow and they can’t disappoint.
A rally failure today calls for a test of yesterday’s lows. Buying the open is risky since prices will initially be marked up. The broad-based S&P 500 has taken a 5-day, 4.6% hit. Without clarification regarding the sustainability of our economic recovery, success in averting a meltdown in Spain and acceptable earnings growth for Q1 earnings, the market will need to probe for a level that discounts these negatives. This can take time to resolve. Unexpectedly good earnings could stabilize the market until there is more clarification about our economy and Europe’s problems.
ECONOMIC REPORTS this week:
ICSC Goldman Store Sales (7:45) rose 0.5% for week ending April 7 up 4.5% over a year ago.
Wholesale Trade (10 a.m.) Sales were up 1.2% to $409.4 billion from January and up 9.3% over a year ago. Inventories were $478.9 billion, up 0.9% over January and up 9.3% over a year ago. The Inventory/Sales Ratio was unchanged at 1.17.
Import/Export Prices (8:30) jumped 0.4% in February due to higher oil prices which were up 1.8% in February alone, 18.4% year over year.
Beige Book (2 p.m.)
Treasury Budget (2 p.m.) U.S. Tsy budget showed a February budget deficit of $231.7 billion. As a result of increased corporate income taxes and reduced interest payments, the deficit is running 3.3% below a year ago.
Jobless Claims (8:30) Declined 6,000 for the March 31 week to 357,000 bringing the four-week moving average down 4,250 to 361,750.
International Trade (8:30)The international trade gap expanded in January to 52.6 billiom from $50.4 billion in December. The increase in the gap was accounted for by a widened deficit in petroleum goods.
Producer Price Index (8:30) Surged in February 0.4% powered by a 1.3% spike in energy. Core PPI was off 0.2%.
Consumer Price Index (8;30)Jumped 0.4% after a 0.2% gain in January. Excluding food and energy, it was up 0.1%.Gas prices were up 6.0%, food prices flat.
Consumer Sentiment (9:55 a.m.) The Reuter’s Univ, of Michigan Consumer Sentiment Index for March rose to 76.2 vs.75.3
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