February chain stores' sales and weekly jobless claims will likely feel the chill from winter storms.
Retailers report monthly sales, mostly ahead of Thursday's opening bell, and they are expected to show the impact of snow bound consumers. However, there could be some weather-related pick up in grocery shopping and online purchases.
John Canally, economist and investment strategist at LPL Financial, said the consensus forecast is that sales will rise by 2 percent, and the weather will certainly be a factor. "It's the lowest volume month for sales. I don't think you can draw a whole lot of inference from February sales, but you like to keep the momentum in place from the holiday season, but the snowy weather was the big wild card," he said.
Thomson Reuters said its same stores sales index is expected to show a 2.9 percent increase, compared to the 4.7 percent decline in February, 2009. Thomson Reuters says Valentine's Day and the President's holiday weekend brought out shoppers despite the weather. The Limited is expected to show the strongest sales gain, up 9.7 percent, in large part because of its Victoria's Secret chain.
Weekly jobless claims are expected to come in at about 470,000, when they are reported at 8:30 a.m. "The weather's been a big issue so hopefully we can get a cleaner report, which we haven't gotten in a while, whether its administrative issues or weather. The good news is you're still 200,000 (claims) below peak and the bad news is the number hasn't budged at all since early December," Canally said.
Other data expected Thursday includes productivity and costs at 8:30 a.m., and pending home sales and factory orders, at 10 a.m.
Wednesday was another quiet day for stocks, as investors await Friday's February employment report. The Dow finished down 9 points, at 10,396, after trading in slightly positive territory most of the day. The S&P 500 was up less than a point at 1118. Materials stocks were the best performers, up 1 percent, as most commodities rose with the weaker dollar.
"You're kind of bouncing around 1100 to 1125 (on the S&P 500). That's typically what you see before jobs reports. You've already seen we're in a period where there's not a lot of clarity on the underlying health of the economy, and in that environment, the market is going to trade in a range. It's going to be buffeted around by Greece and Europe and also the U.S. economic data," Canally said.
Canally said he expects the market to be in its current choppy range, and it is warming to the idea that the jobs data will be distorted.
"The market is giving the jobs numbers somewhat of a snow day. There are expectations the weather is going to affect that jobs report. The consensus was zero, and now it's minus 60,000," he said. He added though from comparisons to other snow storm periods, there could be a case made for several hundred thousand job losses.
In Europe Wednesday, the Greek government took steps toward tougher austerity measures, a move that boosted its bonds and market confidence. The euro bounced back to as high as $1.3702.
Both the Bank of England and European Central Bank hold rate meetings Thursday ahead of the U.S. open. Neither is expected to move on rates, and the market focus will remain on what is happening with Greece.
As of Wednesday, there was no public plan for Greece's issue of 10-year bonds, anticipated by the market for days. Greece had also not received a firm commitment from the EU members for a bailout. "There were all sorts of statements today, none of which involved any type of implicit or explicit guarantee. It looks like they want to do it on the cheap," said David Gilmore of Foreign Exchange Analytics.
"There's a lot of behind-the-scenes politicking on this..The move up today (in the euro) is going to be hard to sustain, short of a more explicit bail out. Even with a bailout, that changes the dynamic for the euro. It introduces the moral hazard question for other weak members, fiscally strapped members, like Portugal and Spain and it demands that the market reprices risk for the Euro zone, and that means Portugal and Spain...They're damned if they do, and damned if t hey don't."
Gilmore said a bailout would also impact the way credits are priced for the stronger members of the EU. "It's probably a slower grind lower for the euro. It dilutes the credibility of the Euro zone by adding these moral hazard bailouts," he said.
Crude oil rose 1.5 percent Wednesday to $80.87 per barrel on the NYMEX. A stronger than expected non services ISM report was one positive for the market.
John Kilduff of Roundearth Capital said oil was due to breakout and he's biased towards an upside move. "You look at the chart, and it's pretty obvious it's due to go one way or the other...The range in crude really got narrower and narrower."
"Gasoline is looking very good. Today, it was really that the dollar index broke 80, and the inventory report was horrible. it was very bearish," he said.
Kilduff said another factor driving oil Wednesday was a report in the China Oil, Gas and Petrochemicals monthly newsletter that predicted a 5 percent increase in Chinese demand this year.
What Else To Watch
The TARP oversight panel holds a hearing focused on assistance provided to Citigroup under the TARP. CEO Vikram Pandit is expected to testify.
Health and Human Services Secretary Kathleen Sebelius meets with the CEOs of Unitedhealth, Aetna , Wellpoint , Health Care Service Group , and Cignato discuss insurance premium increases.
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