Market Talk

US stocks rise, even after Portugal comes out and says it’ll be the third European nation to seek an international bailout.

DJIA rises 33 (0.3%) to 12427; yes, it’s another fresh multi-year high, S&P 500 gains 3 (0.2%) to 1336, Nasdaq Comp adds 9 (0.3%) to 2799.82. Volume’s a bit weak.

There wasn’t much in the way of hard news most of the day, but that serves bulls just fine. They’re buying just about everything. Gold hits a fresh record. Crude hits a fresh multi-year high. Even cotton’s rebounded.

Market shows little initial reaction to Portugal’s admission that it will follow Greece and Ireland in seeking a bailout. It can’t be a good thing that a third European nation is seeking international help because it can’t handle its problems on its own. But the even bigger issue is that everybody, and we mean ev-ree-bo-dee, is already looking past Portugal to its neighbor on the Iberian Peninsula — Spain.

Meanwhile, the Nasdaq Comp continues to flirt with the 2800 level. Our colleague, Tomi Kilgore, penned the following missive:

The fifth time wasn’t the charm for the Nasdaq Composite. Including today, the index has traded above 2800 intraday for the third time in four sessions, and the fifth time since Feb. 22, without closing above it. The Nasdaq ended up 8.63 at 2799.82, off an intraday high of 2815.55. Even if 2800 is cleared, bulls have to contend with nearby resistance within the gap in the charts between the Feb. 18 low and the Feb. 22 high (2808-2824), followed by the Feb. 18 high of 2840.41. Meanwhile, support starts at 2750-2765, which includes the gap between the March 29 high and March 30 low and the 50-day moving average.

Based on premarket futures, US stocks on track to run higher when regular trading gets underway as investors here watch a surging euro and rising European stocks.

Rally in Europe said to be pinned on hopes for the economy as ECB is expected to hike rates tomorrow to corral inflation. Solid German manufacturing data out today, but UK manufacturing wasn’t so hot. Seems basis for rally is a bit flimsy, particularly as a teetering Portugal had to pay an average of more than 5.1% on six-month T-bills in its auction today vs 2.98% a month ago.

Here in the U.S., Chicago Fed’s Midwest manufacturing index hit the tape at 8:30 a.m., and showed some improvement. The bank’s Midwest Manufacturing Index rose 1.3% to a seasonally adjusted 83.3 in February from a revised 82.2 in January, with a 3.5% rise in auto production helping the region outpace broader U.S. indicators. Mind you, that’s for February, before all the problems that erupted in March.

S&P futures up 7.50, DJ futures up 58. Ten-year note flat yield pushing 3.49%. Crude futures higher, Nymex crude at $108.50. Brent crude, meanwhile, is over $122, at $122.40/barrel.

The news headlines certainly aren’t bullish today, but gloomy news seems to be little match for the bountiful liquidity traversing the globe.

Talk about an Alfred E. Neuman morning. Bulls sporting the “What, me worry?” attitude after the collapse of Portugal’s government late yesterday and expectation it’ll join Ireland and Greece in asking the EU and IMF for a bailout, currently pegged around $113 billion.

It certainly doesn’t come as a big surprise, but the reaction in European stock markets, euro rallying seems just a little too cheery. There’s consequences for Spain, Portugal’s biggest trading partner and Moody’s downgraded Spanish banks in the wake of the Portugal developments. That’s among the items being shrugged off this morning, along with percolating oil and a weaker-than-expected February durable goods orders.

European stock markets have strengthened, rallying across the board, and that’s putting US investors at ease. Portugal? Spain? Well, if the Europeans aren’t worried about it, why should we? Or so must go the thinking.

S&P futures up 7.60, off earlier highs. Ten-year note lower, yield at 3.37%.

Hard not to marvel at the US stock market’s ongoing ability to rally amid an array of potential setbacks.

Oil above $105/barrel and record low monthly new-home sales were just a couple obstacles easily hurdled by bulls today. Concerns about Portugal’s debt problems also proved no match for rallying stocks, though the “no” vote on austerity measures came out just as the market was closing (it did weigh on the euro, which slipped under $1.40.)

Materials sector leads stocks higher, followed by consumer discretionary (again, shrugging off oil’s run-up) and tech stocks.

DJIA rises 67 to 12086, and Nasdaq Comp adds 14 to 2698. S&P 500 ends almost 4 points higher at 1297. NYSE volume was just about on the daily average around 4.2 billion shares traded; until the late surge in the last hour, the pace was weaker.

That makes the Dow a winner in four of the last five sessions, taking it to its highest close since March 9, before the Japanese earthquake. The S&P and Nasdaq are also up four of the past five sessions.

Stocks and oil weren’t the only gainers. Gold rose for a sixth consecutive session, to a fresh record high of $1.437 an ounce. Silver, too, was up sharply, finishing over $37 an ounce, its highest close since February 1980 (think the Hunt Brothers.)

“Now the DJIA’s peeking above the 50-day moving average (12053), which has capped the index’s rally the previous two sessions,” Dow Jones’ Tomi Kilgore writes:

Meanwhile, the DJIA is still below the extension of an uptrend line starting at the August lows, which currently comes in around 12200. Since it was the break of this trendline that contributed to last week’s mini-market tumble, it would take a close back above the line to clear the negative technical overhang.

For the S&P 500, the uptrend line resumes around 1340.

The bulls will be gunning for that 12000 level, you can count on that.

Ahead of the open, US stock futures generally flat, with an eye on oil percolating higher again as crude futures are now comfortably above $105/barrel amid the fighting in Libya and general unrest in the Mideast.

Should be more than a casual interest in events in Europe today as legislators in Portugal vote on austerity measures which, if voted down, could lead to the prime minister’s resignation, and possibly hasten the nation’s lurch toward a bailout.

February new-home sales due at 10:00 a.m. Bernanke scheduled to speak to community bankers around noon EDT. BofA says the Fed objects to its 2H dividend plans, BAC down 1.3% premarket.

Generally quiet on the earnings front, with the exception of packaged-foods giant General Mills. Inflation impacts will be a key focus there.

S&P futures down 1.90, Dow futures down 17. Ten-year higher, yield at 3.30%. Yen pegged right around Y81.

With all the compelling news coming out of Libya, the Arabian peninsula and Japan, it’s been easy for investors to overlook the festering sovereign-debt crisis in Europe. But it may come back onto the radar this week, like tomorrow.

Our colleague Min Zeng penned the following missive:

The financial markets are shrugging off the turmoil in Portugal and Ireland today, yet Andrew Brenner, head of emerging markets at Guggenheim Securities, says these two could lead to more volatility in stocks and bonds Wednesday when Portugal’s legislators are scheduled to debate the budget plan. Brenner says Portugal’s main opposition party said they will not support budget cuts so if the budget isn’t passed, Portugal could be forced to ask for funding from the EU. In Ireland, the continued disagreement between Germany and Ireland over corporate tax rates continue to plague negotiation for possible interest rates reductions from the bailout funding for Ireland, he says.

The Journal has a story on Portugal’s budget dilemma. There were reports earlier this week that Portugal’s going to seek a bailout no matter what happens with this vote, but if the measures are rejected, it would force the nation to seek a bailout within a few weeks.

As an indication of how jittery European debt markets are, Ireland’s debt (junior debt, mind you) tanked after after a rumor went through debt markets that Allied Irish Bank missed a coupon payment. The rumors were denied, and the market calmed down, but Ireland’s 10-year bond yield was pushed up to 9.658%. They later fell to 9.278%, for whatever that’s worth.

It’s a good thing the Europeans agreed to that new, permanent bailout fund. They’re gonna need it.

Stocks are rally. So is oil.

Look, we get it. Markets like to rally. Markets like to rally on Mondays, especially on Mondays when there’s a big, juicy M&A deal on the table that gets everybody all jazzed up. Then add in some dry oversold tinder on a Monday after a couple of weeks of persistent sell-offs and this is what can happen.

The Dow is up roughly 200 points, back around the psychologically and technically key 12000 level. The S&P poked its head above 1300. The Nasdaq Comp is up 2%. It’s a risk-on day without a doubt, and investors are piling on.

Let’s keep a little perspective here. Maybe we’re missing something, but the day seems a little thin on “good” news, while stocks base their gains mainly on big M&A and oil marching higher again.

- For starters, the situation at Fukushima Daiichi remains dangerous. The level of damage still isn’t clear, how much melting down there actually was, and what the ultimate solution will be.

- Portugal, one of the nations that supposedly wasn’t Greece, is looking more and more like Greece. Reports are the nation may seeks a bailout by June at the latest, if not earlier. That’d make three European nations on the bailout register.

- The fight in Libya is looking murkier by the day, with what now seems like a hastily arranged no-fly zone putting the western powers into the conflict, without a clear goal or exit strategy. Crude oil prices are reflecting the uncertainly not only in Libya but across the Maghreb and Middle East, rising back over $103/barrel.

That enough risk for you? How about we drill down a bit further?

Continue reading…

US stocks jump alongside stocks in Europe after an auction of Portuguese bonds is deemed a “success.” Yes, Portugal managed to sell a bunch of bonds. But the yields are on the verge of beyond the nation’s ability to handle. Some success.

John said it best, calling it the Portuguese Pretense. You don’t think these guys need a bailout? Think again.

DJIA rises 83 to 11755, S&P 500 gains 11 to 1286, Nasdaq Comp rises 21 to 2737. Euro rises sharply. For the Dow and S&P, it’s the highest close since August 2008. For the Nasdaq, it’s the highest close since November 2007 (March 2000, here we come!)

Here in the States, USDA’s crop report leads to one conclusion: your food bill’s going up. No surprises in latest beige book; economic growth is moderate, job growth is weak.