Futures bounce as mood brightens
David Russell | [email protected]
S&P 500 futures rose about three-quarters of a percent and are near their highs of the session, while the Nasdaq is indicated up almost a full percentage point. European markets are adding more than 1 percent, led by Germany and France. Asia was mixed, with Hong Kong and Singapore positive while Shanghai and Tokyo declined.
The improved sentiment comes after the S&P 500 suffered its worst pullback of the year on concerns that the Federal Reserve will send long-term interest rates higher by halting bond purchases. Two Fed officials, Richard Fisher of Dallas and Narayana Kocherlakota of Minneapolis, countered that belief in separate speeches yesterday. Fisher said that "the word 'exit' is not appropriate," while Kocherlakota urged policymakers to emphasize that policy will remain accommodative for a significant time.
In Beijing, Ling Tao, an official at the People's Bank of China, also declared that liquidity risks in his country's financial system are manageable.
In addition to the soothing words, the S&P 500 is showing signs of potential bottoming after a one-month slide. The index bounced yesterday around the same 1560 level where it consolidated in March and April, and it is near its 100-day moving average.
Today is also the busiest day this week in terms of economic news. It begins with durable-goods orders at 8:30 a.m. ET and home price data 30 minutes later. Consumer confidence and new-home sales follow at 10 a.m. ET. Homebuilder Lennar already reported better-than-expected quarterly results this morning and is up almost 6 percent in early trading.
Commodities are also painting a bullish picture, led by gains of more than 1 percent for copper and silver. Oil is also higher by about one-third of a percent, and agricultural foodstuffs are strong across the board.
U.S. dollar weakness is the main theme in foreign-exchange markets, as the greenback falls against every other major currency. Today's gains in equities and commodities occur against the backdrop of a stronger Japanese yen. That's interesting because gains in the yen at previous times caused panic in the broader market.
In company-specific news, hospital chain Health Management Associates may be active after a major shareholder signaled it would seek a replacement of the company's board. Fast-food chain Sonic is down almost 4 percent after sales missed expectations. Walgreen also fell on weak results.