Stocks are higher again today as investors take advantage of the
recent pullback to get long.
S&P 500 futures are up more than 0.6 percent and near their
highs of the session at the time of this writing, while most
European indexes are up 1.5 percent to 2 percent. Asia was mixed
overnight as Hong Kong rose but a strong Japanese yen weighed on
The S&P 500 gained almost 1 percent yesterday, attempting to
rebound from a one-month slide. The pullback brought the index back
to its 100-day moving average and the same 1560 area where it
struggled in March. This suggests that old resistance has become
support, which is potentially bullish.
Strong economic data also boosted sentiment: Durable-goods orders,
home prices, consumer confidence and new home sales all beat
expectations yesterday. We now enter a period of few headlines,
leading up to the Institute of Supply Management's key
manufacturing index on Monday and monthly employment data at the
end of next week. Markets will also be closed on Thursday, July 4,
and attention will turn to corporate earnings after the holiday.
Treasury bond yields are falling today, which could also support
bullish sentiment. They had surged in the last month on signs the
Federal Reserve will reduce asset purchases. Equities that would
benefit from lower yields, such as utilities and real-estate
investment trusts, have also started to rebound drops from big
drops in the last three sessions.
In an interesting note yesterday, Merrill Lynch classified 43 of 45
global markets as "oversold." Brazil (EWZ), Turkey (TUR), South
Africa, Mexico (EWW), and the materials sector (XLB) were
identified as the cheapest.
Precious metals are making the big move in commodities today, with
gold down more than 3 percent and silver plunging almost 5 percent.
Oil is slightly lower and copper fell 1 percent.
The strength in equities is somewhat remarkable given the move in
foreign-exchange markets today, with the euro down and the Japanese
yen higher. The Australian and Canadian dollars are gaining,
however, which could bode well for global risk appetite.
In company-specific news, touch-screen maker Synaptics is indicated
higher after raised its revenue guidance for the current quarter.
Handgun maker Smith & Wesson is also up after reporting strong
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