Buyers return after stocks pull back
David Russell | [email protected]
S&P 500 futures are climbing about 0.3 percent in early trading, about half as much as much as European indexes. Asian markets were mostly lower in the overnight session, with Japan and Shanghai both down by more than half a percent. Japanese machine orders for August were weaker than expected.
Stocks have been pulling back since last Friday, consolidating near multi-year highs after a summer rally. The gains have come despite economic weakness in China and Europe, driven by the fact that worst-case scenarios of financial contagion never took hold.
Late yesterday, for instance, Standard & Poor's downgraded Spain two notches to BBB-, one level above a junk rating. While initially bearish, International Monetary Fund Managing Director Christine Lagarde said deficit-ridden European countries should have more time to balance their books. Lagarde, as a former French finance minster, has major political influence in the region.
Investors will now look prepare for weekly jobless claims in the U.S. at 8:30 a.m. ET. Economists expect an increase to 375,000 from 367,000 last week. (See related story)
Currencies and commodities are also signaling a modest return of risk appetite. Oil rose by 1 percent, while economically sensitive copper advanced two-thirds of 1 percent. Silver and platinum are also marginally higher, while agricultural foodstuffs are mixed.
Currencies are painting a more clearly bullish picture, with all the traditional correlations at work. The euro, Australian dollar, and Canadian dollar all rose against the greenback, while the Japanese yen is lower across the board.
In company-specific news, Sprint Nextel is up 13 percent in the pre-market after the Wall Street Journal reported that the company is in advanced talks to be acquired by Japan's Softbank.
FedEx is also continuing to climb on bullish analyst comments, one day after the shipping giant rallied on plans to cut costs. FDX is an example of the kind of resilience demonstrated recently by equities because the weak economy forced management to lower guidance last month, but it has now returned to its previous trading levels.
Adtran a maker of networking gear, also rose about 3 percent in early trading after quarterly profit declined less than feared.