9:00am (EST)
The bulls were in the driver’s seat on Thursday – in cruise control – until they hit a traffic jam late in the day. The market soared at the open as the bulls exploited Wednesday’s dip as an opportune time to buy. The short-sellers were crying “uncle”.
We got a hat trick of good news before the bell, 1) Qualcomm (QCOM, $42.19, up $2.00) upped its yearly outlook, 2) Best Buy (BBY, $42.66, up $1.48) banged out an incredible earnings report and 3) jobless claims fell for the fourth consecutive week. And to top it off, Bernanke testified before Congress and reiterated the need for an extended period of record-low interest rates.
Add it all up and you can see why the bulls were cruising.
However, after tapping fresh 52-week highs, the keg ran dry with about an hour before the bell as the market rolled-over amid ongoing concerns over Greece’s debt. We may be closer to a resolution as the European Union (EU) is currently debating a solution for Greece’s bills. The hang-up is if they are going to dip into the International Monetary Fund (IMF) to do a bailout.
As a result, the euro tanked, the U.S. dollar jumped and the bulls’ momentum came to a screeching halt. Another roadblock was an auction for government debt which drew less interest than in past months.
The boys on the hill sold $32 billion in seven-year notes and bond prices tanked. If the government has to boost interest rates to entice buyers then they run the risk of hurting the economy by driving up borrowing costs.
The Dow managed to finish with a 5 point gain and finished at 10,841 but reached a high of 10,955 before falling back. The S&P 500 slipped 2 points and closed at 1,165 after touching a high of 1,180.
The Nasdaq Composite dropped a point and settled at 2,397. The index kissed 2,432 then got slapped.
Of course, that was yesterday and this morning it looks like the bulls are ready to ride again.
The Commerce Department reported that the economy grew at a 5.6% pace in the October-to-December quarter in its third and final estimate of economic activity during the period.
The government first estimated that the economy grew at a 5.7% pace in the fourth quarter then boosted that estimate to a 5.9% pace last month before lowering it slightly, again, last Friday.
Futures were already pointing towards a higher open and stayed strong after the report. We would like to see the bulls hold today’s opening gains throughout the day.
As we head to press, Dow futures are higher by 21 points to 10,812 while the S&P futures are showing a 3 point pop to 1,165. The Nasdaq futures are up 8 to 1,958.
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