Last Year's Losers Getting Some Attention

Stocks on Wall Street are lower in early trading, after breaking out to five-month highs on Tuesday.  That’s when the Dow Industrials tacked on another 69 points, and the S&P 500 closed above its October high of 1,285, ending the session at 1,292.

Mark Newton, Chief Technical Officer at Greywolf Execution Partners, says the market still has room to rally.

“Last year’s beaten up sectors are the winners so far this year.”

Only two of the S&P’s 10 sectors are higher Wednesday: Materials and Telecom; Energy is the biggest loser, as crude oil prices give up more than a buck.

A higher dollar is making crude more expensive for foreigners.  While the U.S. dollar is higher versus the euro, Newton warns, “It is dangerous to be short the euro right now.”

Newton also cites copper’s recent move to the upside as bullish for stocks and for the Chinese economy as a whole.  The Chinese stock market is up about 4% this year.

Concerns in Europe are once again hitting U.S. stocks.  Europe’s strongest economic power, Germany, saw its growth contract slightly in the fourth quarter.  That news overshadowed positive news: Fitch is letting France keep its stellar rating, at least for 2012; and, Italy’s 10-year bond yield fell below the  7% threshold.  Investors are looking ahead to Thursday’s meeting of the European Central Bank, as well as a key Spanish bond auction.

Several U.S. companies are getting hit hard today.

Hecla Mining (NYSE:HL) shares are off 16% and at a 52-week low, as the silver miner cut its production outlook for this year.  Hecla also said mining safety authorities have ordered the company to close a shaft at one of its silver mines where production has been halted since November and isn’t expected to resume until 2013.

Microsoft (NASDAQ:MSFT) shares, while up so far this year, are down today as the software maker warns that its holiday 2011 PC shipments may have been lower than previous thought.  Floods in Thailand have hit hard-drive manufacturing industry-wide, and demand for tablets has hit demand for PCs.  Dell has announced that it, too, will release a tablet later this year.  The computer company is considered using Microsoft’s operating system in that device.