Stock Market Follows The Money, Eyeing Euro Parity

The stock market followed up its worst day in five months with a soggy finish on Wednesday as fears bubble up for the health of future export-sensitive earnings.

But early equity indicators are tipping higher as currency traders come up for air. The euro initially hit a fresh 12-year low of around $1.0494 overnight but has since moved above $1.06; the dollar also eased a touch against the yen.

Stocks are tracking the dollar's continued strength against major currencies, including a move near parity with the euro. Combine this with lingering expectations that the Federal Reserve will now raise interest rates as soon as June … and stop when? Hard to know. Needless to say, we've got a very nervous market on our hands.

Support Becomes Resistance

A familiar number in our chatter about the S&P 500 ($SPY), only the chart has changed it up a bit. Bulls would like to see SPX close over former support at 2050, now our near-term resistance line. Support slides in at 2022.

Third Straight

Sales at U.S. retailers dropped in February for the third month in a row. It would appear that the savings at the gas pump went right … under the mattress? Most store types rung up disappointing receipts last month and it looks like bad weather for high-population areas of the country didn't help.

Related Link: How Crude Oil Hits Stocks Where It Counts

Retail sales fell by a seasonally adjusted 0.6% last month after a 0.8% drop in January and a 0.9% decline in December. Sales minus autos dipped 0.1%, but sales minus gasoline dropped an even steeper 0.8%. Recent retail data isn't entirely in sync with data showing increasingly stronger job growth.

Price Check

The prices the U.S. paid for imported goods rose in February for the first time in nine months, largely because oil's freefall has paused. The import price index increased a seasonally adjusted 0.4% last month, larger than the 0.1% gain predicted on Wall Street. Yet excluding fuel, import prices fell by 0.3% last month.

The monthly release of import/export prices doesn't typically draw immediate market attention but that could change considering the currency trading backdrop. Plus, it's another price report that along with Friday's scheduled producer price index (PPI) report, will carry increasing weight as investors try to gauge the speed and depth of Fed interest rate hikes.

This piece was originally posted here by JJ Kinahan on March 12, 2015.