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June 17, 2013  Mon 7:12 AM CT

SPX: SEE CHART GET CHAIN FIND STRATEGIES
Stocks are gaining this morning after making a higher low on Friday.

S&P 500 futures are up more than half a percent but have retreated from earlier levels, while European indexes are gaining more than a full percentage point. Perhaps most important was a rally of almost 3 percent in Tokyo as the Japanese yen showed signs of stabilizing.

The S&P 500 bounced at its 50-day moving average last week and closed Friday's session above the key 1523 level that was support earlier in the month. The price action suggests that there few sellers who want to exit stocks after the index held support above its previous all-time highs. There was some evidence in recent sessions that hedge funds were trying to drive equities lower, but now the bears appear to be in retreat.

The Federal Reserve's interest-rate decision on Wednesday afternoon is the main item on the calendar this week, though German economic sentiment, U.S. housing starts, and consumer prices will be released tomorrow morning. Today brings two minor releases: homebuilder sentiment and the New York Fed's Empire manufacturing index.

Attention will mainly center on how aggressively the Fed plans to scale back the pace of monetary easing, though investors have had more than a month to accustom themselves to the idea of a less accommodative Fed. The even bigger story now seems to be continued signs of U.S. economic recovery, demonstrated by last week's strong jobless claims and retail-sales data. Reports this morning also showed robust wage and export growth in Germany.

Commodities and currencies are surprisingly tepid given the move in stocks. Oil rose by half a percent but copper is down by a similar amount, while agricultural products and precious metals are weak. The euro is also modestly lower. The Japanese yen is down across the board and is back to a potentially important level against the U.S. dollar from February.

The gains, however, are smaller than one might expect given the big move in the Nikkei index. This suggests that equities are returning to favor on a secular basis, marking a contrast with the 2003-2008 bull market for commodities. The Australian dollar also continues to rebound from multiyear lows.

Few stocks are moving on company-specific news. Wednesday is only session this week with significant earnings announcements, featuring names such as FedEx, Finisar, Jabil Circuit, Micron, and Red Hat.
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