By Carlos Guillen

Equity markets are bouncing back after six days of rather tough trading sessions. Investors are finding some relief in that Europeans appear to be more confident that they will overcome their debt difficulties. Moreover, data from here at home is also giving investors confidence that consumption around the world is still healthy despite all the turmoil in Europe and slower growth in China.

Initial Claims data posted earlier today was a bit encouraging, as the result was better than expected, making a sharp reversal. According to the Labor Department, initial claims during the week ended May 5 totaled 367,000, decreasing from the 368,000 revised figure reported for the prior week and landing above the Street's estimate of 365,000. The four week moving average of initial claims data, considered to be a forward looking indicator, also declined to 379,000 from 384,250. The recent drops in initial claims are helping to provide support for the notion that the high initial claims levels reached during the first three weeks of April were caused by the timing of the Easter holiday rather than by deterioration in employment. While the most recent monthly jobs report showed less than expected nonfarm jobs gained in April, it is beginning to look as if May's jobs figures will actually come in stronger if initial claims pick up on the trend it had back in March.

Also encouraging today was that trade data showed that demand around the world is still strong. According to the Commerce Department, the trade deficit increased 14.1 percent to $51.8 billion in March, above the $45.4 billion reached in February and above the Street's estimate of $50.2 billion. In terms of the two main components, exports increased 2.9 percent to a record high of $186.8 billion, as sales to Mexico, the European Union, and South Korea reached the highest ever, giving no indication of a slowdown in global demand. However, Imports increased at a faster rate of 5.2 percent to $238.6 billion, also a record high, as American's demand for crude oil, computers, automobiles, and televisions propelled imports. Also, the value of imports increased reflecting higher fuel prices and higher prices for Chinese goods after the week-long Lunar New Year holiday that increased demand in the nation. Given that net-exports play a direct effect on gross domestic product (GDP), a wider deficit could lead economists to revise their GDP growth estimates lower for the first quarter of this year, currently standing at 2.2 percent. However, given that both imports and exports increased to record highs, it is difficult to argue for a worldwide slowdown.

In all, today's trading session is serving give more investors confidence that stocks may have been oversold and that this may be yet another opportunity to pick up some beat up stock. Nonetheless, we still expect to see continuing volatility coming from the euro zone as the Greek government it still not running firm and as we wait to see what direction France chooses to take in terms of government spending.