Stocks are trying to rebound from a modest pullback today,
fueled by a rally in Japan.
S&P 500 futures are up 0.25 percent and have been climbing for
the last four hours. Europe is also fighting back from earlier
losses, led by high-beta countries such as Italy and Spain. Most of
Asia was down fractionally in the overnight session, but Tokyo
rallied almost 2 percent after the Bank of Japan said it will
continue buying assets in a bid to drive economic growth. The yen
is crumbling as well, which tends to support equity markets.
The S&P 500 has declined for three straight sessions--its
longest consecutive slide since late September--after touching an
all-time high above 1800 at the beginning of the week. It's been
rallying all year as capital comes off the sidelines, egged on by
an improving economy and easy monetary conditions.
Price action has been somewhat cautious in the last week, with
small caps, transports and consumer-discretionary stocks lagging,
analysis tool shows new strength is appearing among financials and
energy. Both of those sectors had lagged in the longer term.
Yesterday's decline resulted partly from news that the Federal
Reserve might slow the pace of bond purchases, which drove bond
yields higher. But investors may be more willing to get long now
that the central bank's statement is in the rear-view mirror. The
calendar remains relatively quiet through Thanksgiving late next
Retail has struggled recently amid a series of poor quarterly
reports. That trend continues today, with Target, Dollar Tree,
Abercrombie & Fitch, and L Brands all trading lower after
releasing results. Green Mountain Coffee Roasters is climbing after
profit and sales beat forecasts.
In other news, Chinese manufacturing and European private-sector
business both slowed more than expected this month, according to
purchasing managers indexes.
The weak yen is the main story in foreign-exchange markets, though
the euro is also edging higher. Commodities are bullish as well,
with oil and copper both posting small gains. One big question
facing investors now is whether West Texas crude may bounce after
pulling back to levels last seen in June. If it does, that could
support domestic energy stocks.
Precious metals are weak and increasingly look at risk of breaking
long-term support. Agricultural products are mixed.
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