Cyprus bailout keeps momentum bullish
Stocks are climbing this morning after Cyprus accepted a bailout deal, removing the specter of potential debt crisis in Europe.
S&P 500 futures are up about half a percent, while German and French equities are gaining more than a full percentage point. Most Asian indexes rose in the overnight session after the Cyprus news emerged this weekend, led by a 1.7 percent rally in Tokyo.
Money continues to pour back into the stock market as a healthy economic backdrop melts years of investor pessimism. The S&P 500 remains less than 2 percent below its previous all-time highs, while the Dow Jones Industrial Average, Russell 2000 small-cap index and Dow Jones Transportation Average have all broken out to record territory. Only the Nasdaq-100 remains far below its previous peaks from the tech bubble early last decade.
Cyprus agreed to sacrifice its second-largest bank and confiscate large deposits in return for a $13 billion international bailout. The deal eliminated a risk that rattled the market last week after recession in neighboring Greece weakened the island's economy. Other, more-important countries including Italy and Spain, have been recovering from debt worries since late 2012.
Attention now turns to a wide variety of economic data this week, including the Chicago Federal Reserve's regional index today, durable-goods orders and the Case-Shiller home price index tomorrow. Thursday brings German retail sales and initial jobless claims.
Equities have shown broad resilience across many industry groups, with no individual sector dominating performance. Our researchLAB analytics tool shows unusual strength in transports, led initially by airlines but now followed by online travel agencies, ocean shippers and car-rental chains. Other non-cyclical industries such as supermarkets, hospitals and funeral homes have also stood out so far this year. Discount retailers have also been regaining momentum in the last week after more than months of underperformance.
Foreign-exchange trading is also bullish this morning: The euro, Australian dollar and Canadian dollar are all higher, while the Japanese yen is lower across the board. Energy prices are up by about half a percent. Most other commodities, including copper, are down slightly.
In company-specific news, computer maker Dell is up about 3 percent after confirming it has received a second takeover offer. Apollo Group climbed more than 6 percent after its earnings and revenue declined less than expected.
More From optionMONSTER