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Street Mood Sways With Hope for Greek Cure

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February 10, 2015

The Federal Reserve may continue to emphasize the relative insulation of the U.S. economy from Europe’s shocks. Wall Street? Not so convinced. Stocks finished near session lows to start the week and early indicators are choppy on Tuesday, with Greece’s debt troubles and its future with the European Union still up in the air. Appearances of a united front from President Barack Obama and German Chancellor Angela Merkel, who in a press conference encouraged Greece to live up to its debt commitments, had only a limited effect in calming investors. Add in weakness from airline stocks and a McDonald’s (MCD) sales warning, plus ongoing volatility in oil prices (crude actually gained as OPEC bumped up its demand projections), and it was enough to push the broad-based S&P 500 (SPX) to a close on Monday under what’s become key congestion near 2050. Will SPX continue to churn around this chart point?

FIGURE 1: AREA OF CONGESTION.

The S&P 500 (SPX) fizzled late Monday to end below resistance at 2050-2060. Data source: Standard & Poor’s. Chart source: TD Ameritrade’s thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results.

Greek Tragedy or Resolution? News out of Greece continues to flow, so watch for potential intra-day U.S. stock moves that reflect the headlines. According to Bloomberg in an updated report Tuesday morning, Greece offered compromises ahead of an emergency meeting with its official creditors tomorrow. Finance Minister Yanis Varoufakis told lawmakers on Monday that the government intends to neither tear up the existing bailout agreement, nor allow the budget to be derailed. He said Greece will implement about 70% of reforms already included in the current bailout accord. Is it good enough to satisfy Merkel and others? Will the “firewalls” that the EU has set up to protect the body from outliers like Greece hold or will it have to face a major eviction? The market conversation has also shifted to euro alternatives. Is it possible Greece would try to adopt the U.S. dollar, and what then for global forex stability?

Jobs Data Details. Acronym time. JOLTS hits this morning. Otherwise known as the Job Openings and Labor Turnover Survey. It’s a favorite detailed look at hiring health by the Fed’s Janet Yellen. This report does not track the now ever closely watched wage growth line but it does drill down on job churn and areas of hiring. For instance, fewer new hires could mean increases in salaries for current employees, especially for those in high-skill sectors such as science and computing. It’s likely Yellen is looking for continued confirmation that last Friday’s stellar January jobs report has staying power.

A Coke and a Smile Today? Coca-Cola (KO) shares rose in early action after quarterly results, although below the year-ago comparable, beat Street expectations. But execs offered some insight on what’s to come. The beverage and snacks company referred to 2015 as a “transition year” because it needs to work through cost-cutting plans and the sting of a steep dollar. U.S. drinking tastes may be shifting but don’t underestimate the reach that Coke has around the globe. And with that reach? Currency implications. Coke said it has seen its results hampered in recent quarters by its key foreign markets, where the stronger buck, slowing economies, and heightened political volatility are weighing on performance.

Good trading,
JJ
@TDAJJKinahan

JJ Kinahan

JJ began his career in 1985 as a Chicago Board Options Exchange...

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