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NEW YORK (Reuters) – Stocks were little changed in early trading on Monday after equities posted their best week in a month as the euro zone debt crisis and the economy showed signs of stabilizing.
Germany and France pressed for a rapid deal between Greece and its private creditors and said they remained committed to a new bailout that is needed by March to avert a default. Euro zone finance ministers were due to decide later Monday on what debt restructuring terms they would accept.
The euro hit its highest level in nearly three weeks against the dollar on optimism a deal would be reached. USD/
U.S. stocks are up nearly 5 percent this year after four days of gains, with investors particularly emboldened by a turnaround in U.S. banking stocks that have helped lead the rally after an abysmal 2011.
A solid showing in fourth-quarter earnings during the current reporting season has also put a floor in the market.
David Lutz, a trader at Stifel Nicolaus Capital Markets in Baltimore, pointed out that some technical analysts are calling for a pullback after the market’s strong run.
“Some of the market action to me is showing the possibility of a ‘Blowoff Top’ this week before we head south of 1,300 again (on the SP 500),” he said in an email.
The Dow Jones industrial average .DJI was up 13.69 points, or 0.11 percent, at 12,734.17. The Standard Poor’s 500 Index .SPX was up 3.37 points, or 0.26 percent, at 1,318.75. The Nasdaq Composite Index .IXIC was up 8.43 points, or 0.30 percent, at 2,795.13.
The SP 500 is up more than 22 percent from October lows. The Nasdaq 100 .NDX is at its highest level since 2001.
Halliburton Co (HAL.N), the world’s second largest oilfield services company, posted quarterly profit that beat analysts’ estimates, helped by improved activity in North America. The stock, which has rallied 18 percent since late December, fell 3.6 percent to $34.85.
Research In Motion Ltd’s (RIM.TO) (RIMM.O) co-chief executives bowed to investor pressure and resigned over the weekend, handing the top job to an insider with four years at the struggling BlackBerry maker. The stock fell 6 percent to $15.98.
The current earnings season has not been as good as previous ones. Of about 70 companies in the SP 500 that have reported earnings so far, 60 percent exceeded estimates, according to Thomson Reuters data.
“If earnings come in decently I don’t see any type of a big plunge,” said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. But, he added, “I’m still concerned about when we get towards the end of earnings season.”
Given the recent outperformance of economically sensitive stocks compared to interest rates, Goldman Sachs recommended shorting U.S. 10-year Treasury bonds in anticipation that improved economic performance will push yields higher.
“Yields have traded in a tight range around an average 2 percent since September, including so far into 2012,” said Goldman in a research note. “We are now of the view that a break to the upside, to 2.25-2.50 percent, is likely and recommend going tactically short.”
Investors in recent weeks have been heartened by improving economic data, even though progress has been uneven.
Chesapeake Energy Corp (CHK.N) will reduce dry gas drilling and cut production in response to natural gas prices falling below “economically unattractive levels”. The stocks rose 7.6 percent to $22.54.
(Reporting By Edward Krudy editing by Jeffrey Benkoe)