Momentum continues to favor bulls
David Russell | [email protected]
S&P 500 futures are up more than two-tenths of a percent and have been gaining in the last hour, while European indexes are advancing by half a percent or more. Germany's DAX has reached a new all-time peak, fueled by strong industrial orders. Asian markets were also bullish overnight as Japan's Nikkei surged 3.5 percent to its highest level in almost five years.
Comforted by an improving global economy, money continues to shift from conservative fixed-income investments and into equities. The S&P 500 is only about 2 percent above its previous highs, suggesting that significant support would be found on a pullback into the 1590s. That could give investors comfort that there is relatively little downside risk.
The German industrial numbers were also impressive, showing orders up by 2.2 percent in March, while economists had expected a drop of 0.5 percent. There are few other economic headlines this week, which could also support a drift higher. Thursday is the busiest day, with April same-store sales and initial jobless claims on the agenda.
Activity in the foreign-exchange market is mostly bullish as the U.S. dollar falls against the euro and the Canadian dollar. Japan's yen is higher against the greenback but lower against the euro, and the Australian dollar is falling on a rumor that billionaire investor George Soros is betting against it.
Commodities are negative as oil and silver drop by more than half a percent, while gold and copper shed one-third of a percent. Agricultural products are mixed.
In company-specific news, Anadarko Petroleum is indicated to climb about 1.6 percent after its results beat expectations and management raised guidance. Aruba Networks is down 17 percent after cutting guidance. Nationstar Mortgage gained more than 6 percent after reporting strong results and beating estimates. Financials such as Bank of America and Citigroup are indicated slightly higher, as well, after leading the market to the upside yesterday.
The broader price action has also been bullish over the last week as aggressive segments of the market such as transports and small caps outperform more conservative large caps.