Traders are wondering if stocks can stay in the green on Earth Day.
The resilience of the market has been a puzzle to many who thought Monday's selloff was a sign the stock market would finally give up on its six-week rally.
But the market defied naysayers Tuesday, reacting positively to comments from Treasury Secretary Tim Geithner, who said that banks, for the most part, are well capitalized. Financial stocks led the gains, jumping 8 percent. The Dow was 127 points higher at 7969, and the S&P 500 rose 17 to 850.
Big for markets Wednesday will be another deluge of earnings news, including key financial companies Wells Fargo and Morgan Stanley . Geithner speaks again Wednesday, this time on the economy and the Administration's handling of the financial crisis at 9 a.m. He is making his comments at the Economic Club of Washington, ahead of the G-7 and G-20 finance ministers meetings later this week.
Geithner's comments before a Congressional oversight panel Tuesday helped put a bid into financial stocks and caused shorts to cover. Geithner's comments also sparked selling in the dollar and Treasurys. "It was the give back to the stock market trade. As the stock market rallied back, everyone took money out of the safety of bonds," said Michael Franzese, head of government trading at Standard Chartered.
As the 10-year came under selling pressure, its yield rose to 2.901 percent. The dollar fell slightly against the euro, ending five days of gains. It was at $1.2939 per euro, still below psychologically important $1.30 level. The dollar rose 0.9 percent against the yen.
Steve Grasso, with Stuart Frankel at the New York Stock Exchange, said Geithner's comment came simultaneously with a spike in stock futures. "I think Geithner has finally gotten his sea legs. Just his overall competence looked better today," said Grasso. Grasso said an S&P close of 850 or better was a good sign for the market going into Wednesday.
Unlike many traders, he believes 900 could be in the cards for the S&P index before a move back into the 700s. As evidence, he said institutional customers are investing differently than they had been. They are more discerning and are buying selectively even into market weakness. Bank of New York Mellon , for instance, saw its stock sell off after it cut its dividend, but it did not drag all the financials lower, as a similar story on a bank might have in previous sessions.
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But institutions still are not buying as they did in the now, more distant past. "They're not chasing anymore. Instead of buying a million shares, they're saying buy 250,000 and see how it acts," he said.
"It's actually that they are picking names. They're placing bets and the shorts are getting burned," he said.
BIG-TIME EARNINGS LINEUP FOR WEDNESDAY
Tuesday's after-the-bell earnings may have some impact on Wednesday morning. Yahoo moved higher after it reported first quarter net of $117.6 million or $0.08 per share, in line with expectations. Yahoo also said it would slash more than 5 percent of its workforce.
Companies reporting earnings Wednesday morning include AT&T, Boeing, Glaxo Smithkline, McDonald's, Altria, Genzyme, Kimberly-Clark, Northrop Grumman, St. Jude Medical, and Ryder Systems. (See more below earnings quote box.)
After the bell, Apple, eBay, Yum Brands, Sallie Mae, Xilinx, and Qualcomm report. (More on Wednesday's market action below the quote box.)
General Electric , Coca-Cola and JCPenney hold annual meetings.
Other items of interest include FHFA home price data, reported at 10 a.m., and Realty Trac foreclosure data.
The IMF, holding its spring meeting this week, gives its world economic outlook at 9 a.m.
President Obama marks Earth Day with a trip to Iowa to discuss clean energy in the afternoon.
Mark Fulton heads climate change investment research at Deutsche Bank. He was attending Fortune's Green conference Tuesday but stepped out for a quick phone interview.
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Fulton said this Earth Day marks a different world in terms of climate change-related investments, compared to a year ago. He said his firm found 250 policies around the world that were climate change related and now more than $200 billion in stimulus-related investment is headed for climate change infrastructure projects. Some of this, of course, is in the U.S. "Policy remains a powerful driver and last week's EPA ruling is part and parcel of that," he said.
Industries that could benefit from climate change-related investment include batteries, advanced lighting and smart grid technologies. Wind energy could benefit from stimulus because investment for existing projects has been hampered by the credit crisis.
Fulton said attendees at the Fortune conference were asked to grade the Obama Administration on its handling of climate change, and it got an immediate "A."
" I think people think there is a sea change in the desires of this Administration and Congress to make the right moves in terms of climate change and energy policy. in this Administration, it's about energy policy," he said.
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