Steady as She Goes

With few upside catalysts to speak of, stocks failed to extend their recent advance Tuesday. The market is testing the highs of the bull market run over the past year. Financials, retailers, and small caps continue to lead, while energy lags despite general strength in crude oil prices.

Financial stocks continue to see a pick up in trading volume as speculation abounds. Shares in Citigroup (C) rocketed higher Tuesday with heavy call volume. News hit today that the bank is raising money by selling its Citi Property real-estate unit to private-equity group Apollo Management for $3.5 bln, according to Bloomberg. Further, CNBC is reporting Citi will raise $2 bln in a preferred offering priced at a par value of $25 and a yield of 8.875%. The headlines pushed shares up past the $4 level in early trading -- a level not seen since January.

The economic calendar picks up today with January Wholesale Inventories at 10:00 a.m. ET (consensus 0.2%; prior -0.8%). The February Treasury Budget comes in at 2:00 p.m. ET (consensus $222.0 bln; prior month -$42.6 bln; prior year $193.9 bln). Concurrently, Secretary Geithner will testify on the budget release before a House Appropriations subcommittee today.

There was a major deal in the Biotech space with Abbott Lab's (ABT) $450 mln takeover of Facet Biotech (FACT). The deal represented a 66% premium to yesterday's close. 

Also making headlines is networking giant Cisco Systems (CSCO). The company made good on its promise to change the Internet after unveiling its latest and greatest CRS-3 router yesterday. And while cheaper than its predecessors, the $90,000 router has the ability to download every movie ever made in four seconds -- how's that for speed.

This is great news for iPhone users at AT&T (T) suffering from poor network speed and coverage. AT&T said the CRS-3 could help with mobile data, allowing it to serve the manifold increase in traffic volumes the carrier has witnessed since the iPhone introduction. 

Notable upgrades/downgrades include super-major Chevron (CVX) taken down to Neutral from Buy at Bank of America-Merrill Lynch. The stock has lost momentum after peaking in late January despite crude holding around the $80 per barrel range. Note: Oil is trading at $81.77 per barrel ahead of today's weekly inventory data. Meanwhile, Lockheed Martin (LMT) was upgraded to Neutral from Underperform at Macquarie.

In Europe, stocks are showing modest strength across the board following a lackluster showing in Asia.

The euro moved lower in early trading on worse-than-expected German export figures, but has regained its losses. The dollar is trading stronger against the yen and pound, which hit its worst levels of the day following below consensus factory data out of the U.K. -- January industrial production -0.4% m/m (consensus 0.3%); manufacturing production -0.9% m/m (consensus 0.2%). The U.S. Dollar Index is trading roughly flat.

The headlines keep coming out of Greece after Prime Minister Papandreou met with President Obama yesterday. According to The Wall Street Journal, the government is planning to raise 10 bln euros, or $13.65 bln, in one to two issues this March and another $5-$10 bln in separate offerings targeting U.S. and European investors.

In Asia, Chinese loan growth came in at half the rate of January's spike, according to state media. Banks extended roughly 700 bln yuan, or $102.5 bln, in new loans for the month -- in-line with estimates.

The offsetting headline, however, was a report that urban property prices in seventy of the country's largest and mid-size cities rose at the fastest pace in nearly two years. Urban property prices rose an average of 10.7% in February versus 9.5% in the prior month. On a month-over-month basis, the increase is less striking at 0.9%. However, the news underscores enduring fears of a real estate bubble. As the world's economic growth engine, inflationary concerns in China increase prospects for a more aggressive tightening schedule, which will then ripple through the global economy.