A number of explanations have been offered to explain yesterday's weakness.

Doubts about the Greek bailout continue to pop up as the main explanation.  Those doubts were in place ahead of yesterday's open, though, and yet the broader market traded higher for most of the morning.

There has been talk that the FOMC Minutes were a catalyst for the selling, yet they didn't really tell the market anything it didn't already know; moreover, the market began to roll over around 12:00 p.m. ET or nearly two hours before the minutes hit the wires.

The strongest causality in our estimation was the reversal in Apple's (AAPL) stock price.  Shares of AAPL were up 3.3% to 526.29 at their intraday high around, hmmm, 12:00 p.m. ET.  They then proceeded to roll over and closed 2.3% lower at 497.67.

It isn't often that an individual stock holds dominion over things, but in this instance it does appear to be the case.  Apple has been the poster child for the early-year enthusiasm, soaring 30% between its closing level on Dec. 30 and yesterday's intraday high.  It was on a trajectory that couldn't continue, and when it rolled it became a beacon for broader profit-taking activity.

Apple's influence was adequately captured in a quote we read a few weeks ago in which it was noted, "Apple is not a stock, it is an asset class."  That is hyperbole of course, but when a stock is over-owned and overbought like Apple has been, the first sign of buying exhaustion tends to get everyone's attention.

Shares of AAPL are indicated to start relatively flat.  As it so happens, the broader market is indicated to start on a relatively flat note, too, with the S&P futures trading just below fair value.

The futures indication was much weaker overnight, when the spotlight turned back to Greece, Europe, and the bailout that is to be or not to be.  In addition, word that Moody's is reviewing 17 banks and securities firms with global capital markets operations for possible downgrades cast a pall on sentiment.

True to recent form, however, U.S. economic data helped pave the way for a rebound in the futures market.  There were three notable releases this morning and they all surprised in a good way.

• Initial claims for the week ending February 11 declined by 13,000 to 348,000 (Briefing.com consensus 365,000), marking the lowest level since March 2008.  That brought the four-week moving average down by 1,750 to 365,250, which is the lowest level since April 2008. Continuing claims for the week ending February 4 decreased by 100,000 to 3.426 mln (Briefing.com consensus 3.505 mln), lowering the four-week moving average by 8,250 to 3.493 mln.
• Housing starts jumped 1.5% in January to a seasonally adjusted annual rate of 699,000 (Briefing.com consensus 671,000) while building permits rose 0.7% to a seasonally adjusted annual rate of 676,000 (Briefing.com consensus 675,000).  Starts for December were also revised up to 689,000 from 657,000.
• PPI increased only 0.1% in January (Briefing.com consensus +0.3%), leaving the finished goods index up 4.1% on an unadjusted basis for the 12 months ended in January.  That is the smallest year-over-year increase since a 3.6% increase in January 2011.  Core PPI was the data exception, rising 0.4% (Briefing.com consensus +0.2%); however, about 40% of that increase was attributed to higher prices for pharmaceutical preparations, which are not expected to persist.  Core PPI is up 3.0% over the last 12 months.

If only core PPI was weaker than expected, then we would have had a straight flush on the data front.  Even so, four of a kind -- claims, starts, permits, and total PPI -- is still a winning hand most of the time.

The equity market could still encounter some profit taking today, but the reassuring message of growth in the data, and particularly in the labor data of late, supports the idea that pullbacks will be looked at as a buying opportunity barring an exogenous shock.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.