Stocks are down this morning as investors remain on guard about
the risk of higher interest rates.
S&P 500 futures are falling by about 0.5 percent and near their
lows of the session, while European indexes are down as much as 1
percent. Asia also fell overnight, led by a 2 percent drop in
China, after the Communist Party failed to present detailed plans
for economic reform. The weakness overseas follows a pattern of
outperformance by the United States that has emerged in the last
After a blistering rally in mid-October, the S&P 500 has traded
in a 30-point range near record highs for the last three weeks.
During that time, investors have absorbed corporate earnings and
data showing that the economy continues to strengthen.
The big question now is when the Federal Reserve will stop buying
bonds, which has kept interest rates low. That focuses attention on
Fed Vice Chair Janet Yellen's testimony in the Senate at 10
a.m. ET tomorrow. Her appearance is especially important because
she's been nominated as the next head of the central bank.
No other important economic events are on the calendar, although
technology giant Cisco Systems reports earnings after the closing
market scanner shows industrials and technology stocks, less
affected by higher rates,
outperforming the broader market in the last two weeks. Groups such
as 3-D printing, firearms, solar energy, railroad suppliers,
car-rental stocks, and retail brokerages have also led.
Commodities are mixed today, with oil higher and copper lower.
Brent crude is also up more than West Texas Intermediate, which
could support refinery stocks. Precious metals are little-changed,
and agricultural products are mixed.
Foreign-exchange trading is cautious as the euro declines slightly
and the Japanese yen posts small gains across the board.
In company-specific news, bond insurer MBIA could be active after
reporting better-than-expected earnings. Canadian Solar is also up
about 3 percent on a strong quarterly report.
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