The bullish momentum continues in stocks today, this time aided
by strong economic data from Japan.
S&P 500 futures are indicated to begin the last day of the
second quarter up more than one-quarter of a percent, following a
3.5 percent advance in Tokyo. Hong Kong and Shanghai gained 1.5
percent, though Europe is weak. Bond yields are down, boosting
Japanese industrial production rose 2 percent, much better than the
0.2 percent forecast by economists. Retail sales also increased by
0.8 percent, compared with expectation of no growth. The news
follows a positive gross domestic product revision earlier this
month and confirms that the world's No. 3 economy is emerging from
years of stagnation.
The only data reports in the United States today are the Chicago
purchasing managers index at 9:45 a.m. ET and the final revision of
consumer sentiment 10 minutes later. Next week is more important,
with the pivotal Institute of Supply Management index Monday
morning, along with employment data later in the week. Volumes will
also probably be light with U.S. markets closed Thursday for the
July 4 holiday.
The S&P 500 has risen for three straight sessions after
bouncing at its 100-day moving average on Monday. The index has
been in a strong uptrend since late last year as the economic
picture brightens in the United States, Japan, and Europe. Emerging
markets have mostly struggled.
Next month also brings the onset of another corporate earnings
season, which officially begins on July 8 with Alcoa's results. The
big question now facing investors is whether the decline in late
May and early June was the deepest pullback we'll get or whether to
wait before putting more money to work.
Treasury yields are also indicated to fall again today, which could
further boost confidence in financials. Stocks that are sensitive
to interest rates, such as utilities and real estate, have
outperformed in the last week as bond prices rise and borrowing
costs fall. That's a reversal of a move that took place over the
last two months.
Our proprietary researchLAB market scanner also shows strength over
the last week in emerging markets, solar, motor homes, and regional
banks. Coal, precious metals, and materials producers have lagged.
Foreign-exchange and commodity markets show a mostly bullish mix of
price action, with the euro higher and the yen down. Oil and copper
are up slightly. Gold fell almost 1 percent but silver is trying to
bounce, climbing more than 1 percent.
In company-specific news, Research In Motion is down 19 percent
after reporting a surprise first-quarter loss. IT Consultancy
Accenture declined 8 percent after revenue missed forecasts and
management cut guidance.
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