The scarce economic news and the worries about the future of the economy do not give investors direction, therefore in the early trading the stocks point to lower opening.
Chief Market Strategist Al Goldman and Senior Equity Market Strategist Scott Marcouiller comment on today's pre-market opening.
A late rally pushed the DJIA to a 44.13-point gain and the S&P 500 closed modestly positive. Both indexes finished at their intraday highs. The Dow declined as much as 74 points and the S&P 500 -10 points in early trading as both indexes tested the lower end of their ranges that have been in place since early May. Early selling appeared to be follow-through from last Thursday’s disappointing employment report.
Activity in the services industry rose to its highest level in nine months as the June ISM non-manufacturing index beat expectations (reported 47.0 v. estimate 46.0), but the market ignored the report. After stocks bounced around the first hour, the averages then settled into up-trending channels. An acceleration higher in the last 30 minutes pushed the DJIA up 60 points. The other large and small cap averages narrowed their losses.
The broad market likewise showed significant improvement. NYSE issues recovered from 5/2 to 3/2 negative by the close and up/down volume from 3/1 negative to 7/5 negative. With little news to trade on, the agreement between President Obama and Russian President Medvedev to reduce their respective country’s nuclear arsenals added a positive for stocks.
Energy was the worst performing sector as oil prices slid 4%. Tech stocks were a drag. On the positive side, the consumer staples sector was the standout leader and a big factor in the Dow’s relative outperformance.
Volume was relatively heavy on the NYSE, while the NASDAQ ran light. It was encouraging action for stocks as the major averages continue to trade within the confines of their eight-week correction/consolidation ranges. Investors are advised to buy selloffs.
Today – Stock futures were indicating a higher opening, but now have reversed to signal a modestly lower opening. There is little corporate or economic news due today to give investors direction. We will see if the market can follow through on yesterday’s late gains.
By Wells Fargo
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