Posted on March - 01 - 2011
Traders May Hold Firm To Optimistic Growth Expectations
- The major U.S. index futures are pointing to a higher opening on Tuesday, with sentiment reflecting expectations that the results of the manufacturing survey to be released shortly after the markets open may show continuing strength in the sector. Risk appetite has improved, with economic readings from across the Atlantic and Asia adding to confidence about the sustainability of the economic recovery. Risky bets such as the euro and the pound are firmer against the dollar, which in turn in sending commodities prices higher.
Traders may also focus on Federal Reserve Chairman Ben Bernanke’s semi-annual monetary policy report to Congress. Some caution may be exercised by traders over the fluid geopolitical situation in the Middle East and North Africa.
U.S. stocks extended their gains for a second straight day on Monday, as a further moderation in oil prices and largely positive economic data generated buying interest. The major averages opened higher and rose further in early trading before moving roughly sideways for the rest of the session.
The Dow Industrials ended the session up 95.89 points or 0.79% at 12,226, while the S&P 500 Index rose 7.34 points or 0.56% to 1,327 and the Nasdaq Composite Index added 1.22 points or 0.04% to close at 2,782.
Twenty-five of the thirty Dow components closed higher, with Verizon (VZ), Pfizer (PFE), 3M Co. (MMM), McDonald’s (MCD), Johnson & Johnson (JNJ), Hewlett-Packard (HPQ), Chevron (CVX) and DuPont (DD) advancing strongly in the session. On the other hand, Intel (INTC) slid 1.78%.
Among the sector indexes, the Dow Jones U.S. Basic Materials Average rose 1.03% and the NYSE Arca Gold Bugs Index climbed 1.59%. Meanwhile, the Philadelphia Semiconductor Index receded 1.09%, the NYSE Arca Internet Index slipped 1.07% and the NYSE Arca Disk Drive Index fell 1.23%.
On the economic front, the National Association of Realtors reported that its pending home sales index fell 2.8% month-over-month in January. On a disappointing note, the index for December was downwardly revised to show a 3.2% drop compared to the 2% increase estimated initially. Pending home sales fell in the North East, Midwest and the West, while pending home sales improved in the South.
The results of the ISM-Chicago’s purchasing managers survey showed that manufacturing activity in the mid-Western region picked up in February. The purchasing managers’ index rose 2.4 points to 71.2, the highest reading since July 1988. The new orders index edged up 0.2 points to 75.9 and the shipments index climbed 4.5 points to 78.2. The order backlogs index rose 1.2 points to 61.8, while the employment index fell 4.3 points to 59.8.
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