Profit-taking follows holiday rally


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Stocks are lower this morning after blasting to record levels on Thursday.

S&P 500 futures are down 0.2 percent, similar to the moves in Europe. Asia was mixed, with Japan fractionally lower amid profit taking following a recent rally, while India kept climbing to new highs.

The S&P 500 rose 0.55 percent to 1985 on Thursday's holiday-shortened session, with the market closed on Friday for Independence Day. It was the index's third straight record close, and the mega-cap Dow Jones Industrial Average broke 17,000 for the first time ever.

Capital has poured into equities evidence continues to mount that the U.S. economy is on the mend. Sentiment has recently shifted back to more domestically focused areas such as health care, retail, media, housing, e-commerce, and small caps. Energy, the previous leader, has lagged while utilities have fared even worse as the stronger U.S. economy lifts bond yields.

This week's agenda is relatively quiet but marks the official start to second-quarter earnings season with Alcoa announcing results tomorrow afternoon. The Federal Reserve releases minutes from its last meeting on Wednesday afternoon, and Chinese trade numbers later that evening could affect sentiment Thursday morning.

Attention then turns to financials with Wells Fargo scheduled to report numbers Friday morning. Citigroup, JP Morgan, Goldman Sachs, and other major lenders follow early next week.

Our researchLAB market scanner has also shown strength in basic metals like copper and iron ore. Staffing companies, railroad suppliers, semiconductors, and retail brokerages have outperformed as well.

In company-specific news, Applied Materials rose 2 percent this morning after being upgraded to "overweight" by JP Morgan. Archer Daniels Midland, Expedia and Warren Resources also announced acquisitions but are little-changed.

Commodities are edging lower as copper, gold, and silver pull back. Oil is flat. Currencies are painting a slightly cautious picture as the safe-haven Japanese yen strengthens. The euro is gaining against the U.S. dollar and British pound after the Sentix investor sentiment index unexpectedly rose.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing , Options

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