Stocks little-changed after big run
David Russell | [email protected]
S&P 500 futures are little-changed this morning, while most European indexes have rebounded from earlier losses and are now up slightly. Asia was mixed in the overnight session, with Shanghai up but Tokyo lower. The Japanese yen is gaining across the board and oil is higher on supply concerns.
Equities have rallied back to barely 1 percent below their previous all-time high in early August, after several economic reports showed that the world is now enjoying its strongest growth since before the 2008 crisis. Investors have been putting money to work broadly across the market, but our researchLAB scanner shows them focusing on cyclical stocks that benefit from an improving economy. Ocean shipping companies, steel makers, coal miners, and industrials in particular have outperformed in the last week.
Companies that benefit from a stronger consumer, such as casino operators, homebuilders, and snowmobile makers have also stood out.
Today's news may be less impressive, with Eurozone industrial production shrinking rather than growing as expected in July. Japanese machine orders and Australian employment also lagged forecasts. Attention now focuses on initial jobless claims in the United States at 8:30 a.m. ET, followed by the more-important retail sales and consumer sentiment tomorrow morning.
Investors are also concerned about how much the Federal Reserve will slow its program of bond buying and are focused on next Wednesday's monetary-policy announcement. Despite the worries, a 10-year Treasury bond auction went better than expected yesterday. A 30-year auction today could also provide clues about the future of interest rates.
The strong yen, triggered by Japan's weak machine orders, is casting a bearish shadow across foreign-exchange markets. The Australian dollar, which also follows sentiment toward the global economy, is down almost a full percentage point while the euro is edging lower. Copper, another bellwether for global growth, dropped more than 1 percent. Gold and silver shed about 2 percent, and agricultural foodstuffs are mostly negative.
Crude oil is the only major commodity trading higher, lifted almost 1 percent by a report that oil production will lag demand within nations in the Organization of Petroleum Exporting Countries (OPEC).
In company-specific news, Lululemon Athletica and Vera Bradley are down 8 percent and 9 percent respectively on weak guidance. Coal miners could also be active after the Obama administration issued stringent emission rules for new power plants.