Stocks up on hopes for global growth
David Russell | [email protected]
S&P 500 futures are up about 0.25 percent, matching gains of a similar magnitude in Europe. Indexes were mostly higher across the Asia-Pacific region overnight after China reported a sharp slowing of inflation. Traders think that will keep the country's central bank from raising interest rates.
Equities in China and Australia, which is highly dependent on the mainland country, rallied about 1 percent on the news. Japan's Nikkei edged lower.
Corporate earnings season officially began yesterday afternoon with mixed results from aluminum producer Alcoa. Other companies will release final and preliminary numbers at an accelerating pace throughout April, shaping opinions about whether to keep buying equities near long-term highs or to take profits.
While employment data has recently disappointed, sentiment remains firmly bullish as capital trickles out of fixed income and investors expect the global economy to keep improving. The Dow Jones Transportation Average and Russell 2000 small-cap index have already broken out to all-time highs, and the big question now is whether the S&P 500 will follow by pushing through its 2007 peak of 1576.
A late-day fit of buying yesterday drove the benchmark to 1563, back above its 10-day moving average, while small caps and transports led the S&P 500 for the first time since mid-March. That may suggest short-term momentum is turning bullish once again. Financials also staged a turnaround yesterday, fighting back from early losses to end higher. If they return to rally mode, it could also support equity prices.
Commodities and foreign-exchange trading are modestly bullish. Oil is up about one-third of a percent and copper is adding about 0.75 percent. Precious metals and agricultural products are mixed. The euro, Australian dollar and Canadian dollar are all higher against the U.S. currency. Then Japanese yen, however, is higher against most others.
In company-specific news, Alcoa is lower by about 1 percent following its results after yesterday's close. Retailer J.C. Penney is down 8 percent after firing CEO Ron Johnson. It had initially rallied yesterday afternoon on the move but is now falling as investors focus on how the company's board of directors handled the situation.