Stock Market News for February 16, 2010 - Market News

China’s move to contain rapid credit growth by limiting bank loans and European Union’s weak gross domestic product unnerved investors Friday, sending the Dow average down as much as 160 points in the morning session.  Later, the blue-chip index pared much of those losses to close down 45 points as technology shares showed strength.

Industrial stocks and shares of companies that have extensive business interests overseas took a hit as investors worried a slowdown in China would impact the global economic recovery.  Shares in Alcoa (NYSE:AA), Boeing (NYSE:BA) and General Electric (NYSE:GE) closed down at least 1%.  Dollar-traded commodities were also down.  A scheduled $81 billion auction of government bonds last week received a lackadaisical response, sending the yield of the 10-year higher to 3.695% from 3.571% at the beginning of the week. 

This morning’s stock futures suggest Wall Street would open with modest gains as traders return to their desks after a long weekend.  Ahead of the opening bell, Dow Jones industrial average futures rose 28, or 0.3%, to 10,145.  Standard & Poor's 500 index futures rose 4.20, or 0.4%, to 1,083.30, while Nasdaq 100 index futures rose 6.25, or 0.4%, to 1,789.50.

Nevertheless, benchmark equity indices managed to break a four-week losing streak as volume turned light, impacted by fierce winter weather.  For the week, the DJIA advanced almost 87 points, or 0.9%, the S&P gained 0.9%, and the tech-heavy NASDAQ led with a 2.0% jump.

Risk appetites also got a boost last week after European leaders pledged to support Greece, even as China announced plans to hike banks’ reserve requirements in an effort to keep its economy from growing too fast.  The design and content of the Greece help package were vague, as were Greece' ability to enforce cost-cutting and/or tax revenue-increasing efforts in the face of last week's greater-than-estimated, 2009 contraction of about 2% versus the expected 1.2%.

It was China's move to curb lending that had forestalled equity advances earlier in the year.  However, Beijing’s announcement last week of raising its largest bank reserve requirements 50 bps in an attempt to offset inflationary pressures was somewhat factored in by market participants.

The flurry of earnings reports lightens this week.  Nevertheless, a number of retailers, many of whom posted better-than-expected January comparable sales and raised their quarterly guidance, are due to report their results this week.  These include Wal-mart (NYSE:WMT) JC Penney (NYSE:JCP), and Abercrombie and Fitch (NYSE:ANF).  DJIA components Kraft (NYSE:KFT) and Hewlett-Packard (NYSE:HPQ) are due for release, along with Dell (NASDAQ:DELL), Applied Materials (NASDAQ:AMAT), Deere (NYSE:DE), and Merck (NYSE:MRK).

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