The market got out of its sideways stupor yesterday and pushed to new multi-year highs on the back of better-than-expected economic data and asset reallocation trades. The move was notable not only for those reasons, but also because it occurred without any support from the financial sector (-0.1%) or Apple (AAPL), which were skipped over by yesterday's buyers.
The equity market's advance was the picture of equilibrium for the major averages as the Dow, Nasdaq, and S&P 500 all advanced 0.6%.
That was some unusual uniformity that suggested to us there might have been a finely calibrated asset reallocation trade out of Treasuries and into stocks at work. The 10-yr note slipped 15 ticks, recovering from session lows late as stocks slipped from their session highs late.
Things have cooled down a bit this morning, which is a bit surprising considering a series of economic reports out of China implied things are heating up there.
Specifically, China reported Q4 GDP was up 7.9% from a year ago versus 7.4% in the third quarter. That was the first pickup in growth in two years. Fixed asset investment increased 20.6% for the year, industrial production jumped 10.3% in December, and retail sales surged 15.2% from the same period a year ago.
China's encouraging news helped boost Asian markets. Japan's Nikkei outdistanced them all, though, as it rallied 2.9% in response to reports an economic adviser to the prime minister said the country could tolerate a USD-Yen exchange rate of 95-100. Exporters took off on that assumption.
Things are more subdued in Europe where major bourses are little changed after a batch of economic data, and a report that Spain's bad loan ratio hit another record high, offered sobering reminders of the challenges facing the real economy.
In turn, a lackluster opening indication for the US has kept things in check in Europe.
At the moment, the S&P futures are up a point and are trading close to fair value. That should set the stage for a flattish start.
Intel (INTC) is a drag on the broader market. It is trading 6.0% lower in premarket action following a fourth quarter report that was weak on all fronts. The chip maker's operating profit was down 31% on a 3% decline in revenue. Of course, it beat the Capital IQ consensus earnings estimate by three cents, albeit with the help of a lower-than-forecasted tax rate and share buyback activity.
Capital One (COF) is another laggard after it missed the Capital IQ consensus earnings estimate by $0.16. AT&T (T), meanwhile, said it expects to see pressure on operating income, margins, and EPS in the fourth quarter after selling 10.2 mln smartphones, which carry high subsidies. Shares of T are down 0.7% in premarket trading.
General Electric (GE) is helping to act as an offset. The blue chip bellwether is up 3.6% in premarket trading after the company reported a 13% increase in earnings per share on a 3.6% jump in revenue. GE also said it ended the year with record backlog and that it is on track to achieve double-digit earnings growth in 2013.
Morgan Stanley (MS) and Schlumberger (SLB) are also drawing some early buying interest in the wake of their earnings reports that is helping to offset the drag from Intel and other disappointments like Johnson Controls (JCI), which beat by a penny but warned for its fiscal second quarter.
The only report on the economic calendar today is the University of Michigan Consumer Sentiment survey for January. Analysts expect the reading to tick up to 75.0 from 72.9.
As a reminder, the market will be closed Monday in observance of Martin Luther King, Jr. Day. There will be no rest for the weary on the return, though, as the earnings floodgates open on Tuesday.