EmailThe equity market had a little party on Monday, rallying 0.9% on broad-based buying efforts but low volume. There is no point in making any grand pronouncements about what the rally means in the grand scheme of things, because it could just as easily be unwound today.
The market's manic behavior is a symptom of uncertainty that has been fed by the dynamic nature of headlines regarding key considerations, namely Greece, the debt ceiling, China's economic standing, and the fortunes of the U.S. economy.
Depending on the day or the hour, things either feel better -- or they don't.
Things don't feel great this morning as images of violent protests in Athens capture the level of public distaste for austerity measures in Greece that will complicate tomorrow's vote in the Greek parliament. Still, things could feel a lot worse.
The S&P futures are actually up about five points and are signaling a slightly higher open for the cash market in spite of the mix of rocks, tear gas, and contempt that is paving the streets of Athens. At the least, these protests show that implementation of the austerity measures -- if approved, as the market thinks they will be -- will not be an easy task.
Participants will understandably remain focused on Greece, yet Nike (NKE) has provided a welcome distraction in reporting better-than-expected fiscal fourth quarter earnings and a 15% increase in futures orders (12% ex-currency changes) that cover the June to November period.
Nike gets roughly 65% of its sales outside North America, so the strength in futures orders is a comforting indication that demand for its products remains solid. Nike is a good example of a company that fits an investment theme we have been emphasizing at Briefing Research, Briefing.com's institutional research service. Specifically, it is a multinational company that is in good position to capitalize on the emergence of the middle class in developing economies.
Other distractions include a better-than-expected retail sales report for May out of Japan that is helping recovery arguments following the March earthquake and the potential for quarter-end buying activity in names that have been beaten down in the equity market's spring retreat.
On the latter note, it was interesting to see large-cap technology stocks get a healthy boost on Monday that was reflected in the 1.6% gain in the Nasdaq 100.
Today's economic lineup will include the S&P/Case-Shiller Home Price Index for April (Briefing.com consensus -3.9%; prior -3.6%) and the Conference Board's Consumer Confidence report for June (Briefing.com consensus 60.8; prior 60.8).
Neither report is being looked at as a medium for good news, so the potential is there for an outsized response in the event the data are not as bad as feared. Conversely, weaker-than-expected results could easily be used as an excuse to sell into yesterday's strength.
Separately, there will be a $35 bln 5-year note auction today, with results announced at 1:00 p.m. ET.
--Patrick J. O'Hare, Briefing.com
Patrick J. O'Hare is the Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial please email researchsales@briefing.com.
