Stock futures are battling for green
David Russell | [email protected]
S&P 500 futures and European markets are down less than two-tenths of a percent. They've been climbing all morning, fighting back from negative earnings reports yesterday afternoon from technology heavyweights Microsoft and Google. Asia fell in the overnight session, with Shanghai and Tokyo both down 1.5 percent.
The S&P 500's ending level of 1689 marked the fourth time in the last six sessions that the index closed at a new record high. It's been pausing around a resistance level from May, but refusing to back down as several positive catalysts remain intact.
One is demand from retail investors, who've been pouring money into mutual funds and exchange-traded funds. Another has been strong earnings from financials, with today's winners including SunTrust Banks, State Street, and Capital One Financial. Regional manufacturing surveys from the New York and Philadelphia Federal Reserve banks have beaten expectations, pointing to potential acceleration in the economy. Finally, Fed Chairman Ben Bernanke just spent two days assuring Congress that he will not let interest rates increase more quickly than the economy can handle.
In addition to the strong domestic data, there have recently been signs of stabilization in China, and the Baltic Dry Index of shipping rates has rallied sharply in the last month.
The big question now facing investors is whether there will be another opportunity to get long at lower prices or whether to buy now.
Our researchLAB market scanner shows bullish price action in the last week, with transports and small-caps leading the market and the biggest companies lagging. On a sector basis, financials have led. Utilities, normally a safe haven, have also been strong as they rebound from a sharp selloff earlier in the spring, while energy has also outperformed. Materials, hampered by chemicals, and tech have lagged.
Commodities are modestly bullish this morning, with oil climbing by less than half a percent and copper up slightly more. Precious metals are also posting small gains. Foreign-exchange is mostly non-directional, though the Australian dollar is trying to climb once again after hitting its lowest level in almost three years earlier this month.
In company-specific news, GOOG is down 3 percent after a shift to lower-margin mobile ads caused profit and revenue to lag estimates. MSFT is indicated lower by 7 percent after weak PC sales and bloated tablet inventories hurt results. Intuitive Surgical is also sharply lower, but General Electric rose 1 percent after its earnings beat expectations. COF is up 3 percent on its strong numbers.