Stocks higher on global optimism

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Stocks are inching higher as overseas markets rally sharply on news of reforms in China.

S&P 500 futures are rising fractionally, while major European markets are up about 0.5 percent. The Shanghai and Hong Kong indexes surged almost 3 percent in the overnight session after the Communist Party said it will allow larger families and loosen control of financial markets.

Following several years of underperformance, international stocks enjoyed a strong run between June and mid-October. They then pulled back but have started to rally again in the last week, according to our researchLAB market scanner.

Today's overseas price action is also noteworthy because Italy and Spain, the higher-beta European countries, are both rallying more than 1.5 percent. Combined with several bullish options trades last week, it suggests that sentiment is starting to favor international stocks once again.

The S&P 500 has been climbing into record territory the last three sessions as an improving global economy, ample cash on the sidelines and accommodative monetary policy keep money flowing into equities. There are also few calendar events this week that could derail sentiment.

Even before news of the reforms in Beijing, researchLAB was showing strength in Chinese stocks, especially Internet and gaming companies. Aside from global names, retail has also been strong in the last week as investors look forward the holiday-shopping season at a time when the economy and job market are improving. Transportation and travel-related companies such as car-rental agencies, truckers, and railroad-supply companies have also stood as well.

In company-specific news, Tyson Foods is indicated higher by 4 percent after earnings beat expectations. JinkoSolar is also up more than 8 percent on a strong quarterly report. Attention next focuses on retail, with Urban Outfitters issuing results after the closing bell, followed tomorrow morning by Home Depot, Best Buy and TJX. Lowe's, JC Penney, Staples, and L Brands report Wednesday.

Aside from small declines in oil and precious metals, commodities and currencies are little changed today.



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

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This article appears in: Investing , Options

Referenced Stocks: SPX

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