Stocks Run Up on Greece Speculation, Jobs Outlook
NEW YORK (TheStreet) -- Stocks posted a second day of gains after a steep selloff earlier in the week as investors speculated that Greece was successful in its debt swap efforts.
Stocks have drifted higher since Tuesday, which saw the worst plunge in markets year-to-date. Traders are now focused on the official outcome of Greece's debt restructuring as well as Friday's payroll numbers out of the U.S. Expectations for February job gains are high, with economist looking for north of 200,000 additions according to Thomson Reuters.
The deadline for private bondholders in Greece to agree to take a write-down on their holdings passed at 3 p.m. Thursday. A formal announcement on how many investors signed up for the swap will be available sometime Friday morning. However, several newswires reported that more than 75% of the debt to be restructured has been tendered. With stocks popping one hour before the close, it seemed that investors believed Greece would move with its plans.The €206 billion debt restructuring deal is crucial given that it is a prerequisite for Greece to be able to receive a €130 billion rescue package. "[There was] quite a bit of short covering going into the completion of the Greek bond swap," said Quincy Krosby, market strategist with Prudential Financial, explaining that traders don't want to get caught if the market rallies on news of the swap's success. In Germany, the Economy Ministry in Berlin said that that the country's industrial output bounced back more than expected, helped by gains in construction output thanks to a mild winter. Output rose 1.6% in January after a fall of 2.6% in December, which marked the biggest drop in almost three years. Elsewhere in Europe, European Central Bank President Mario Draghi hinted that the ECB may be done with its long-term liquidity injections, or LTRO. Draghi said that the worst of the eurozone debt crisis is over despite ongoing economic sluggishness and added that euro area inflation may exceed the bank's 2% limit this year. In a sign that debt contagion fears were easing, bond prices in the eurozone, including in Italy and Spain have fallen. Italian government bond yields have dropped to their lowest levels since the middle of last year. London's FTSE finished up 1.18%, and Germany's DAX closed higher by 2.45%. In Asia, Japan's Nikkei Average finished stronger Thursday by 2.01% as Japan's economy was reported to have contracted a revised 0.2%, which was less than the prior fourth-quarter estimate. Hong Kong's Hang Seng index closed up 1.32%. Earlier Thursday, the Labor Department reported that the number of Americans filing for first-time unemployment benefits rose by 8,000 to 362,000 last week from a revised 354,000 the preceding week. Analysts surveyed by Thomson Reuters expected weekly initial jobless claims for the week ended March 3 to fall to 350,000 from an originally reported 351,000. "[There was] a small uptick in claims, but the four-week moving average is still basically at the lowest levels since March 2008 so it's hardly a threat to the notion of improving labor conditions," says David Ader, a strategist at CRT Capital Group. Also today, the Federal Reserve reported that U.S household wealth grew by $1.19 trillion in the fourth quarter from the prior quarter to $58.5 trillion. Household wealth increased for the first time in three quarters as gains in stock prices overtook a decline in home values.
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