Flat to higher start after GDP surprises
U.S. stocks are expected to open flat to higher, with concerns about declines in Asian equities overnight and sloppy corporate profit reports countered by a better-than-expected tally on GDP. The Dow is called flat to 15 points higher, while the Russell 2000 (NYSE:IWM) is seen opening near steady levels at 453.25.
The GDP report headline figure came in at minus 3.8%, which was much better than expected. The consensus forecast was for a slide of 5.3%. Even though the number beat the projection, it was still the worst showing for the U.S. economy since 1982.
In overseas action, Europe was slightly lower ahead of the U.S. open, while Asian equities tumbled 1.6%, pulled down by losses in bank and tech stocks, even though Hong Kong shares were up 0.9% on hopes for rate cuts out of China.
On the U.S. corporate front, Amazon.com (Nasdaq:AMZN) and SunPower corp. (Nasdaq:SPWRA) beat the estimate and could attract buyers early today. However, as usual the bulk of the earnings news was less upbeat, with Proctor & Gamble Co. (NYSE:PG) coming in near the forecast, but with sloppy sales numbers. That same theme was seen for Honeywell International Inc. (NYSE:HON). Dow stock Caterpillar Inc. (NYSE:CAT) could be on the defensive following an analyst downgrade overnight.
The chart picture for small caps remains in a long-term sideways consolidation, but has seen volatility in January as the market struggles to absorb bad economic and corporate news while weighing valuation. For today, key support near 450 appears to be on a test zone right away. Below there, mild support is at 444, but the big area is down at 439-440. On the upside, resistance comes in at 459 and 466.
