Higher opening seen on overseas gains
U.S. stocks are expected to open higher, lifted by gains in Europe and Asia, where tech stocks, steel companies and oil shares were on the rise despite a dip in oil prices. Automakers were climbing in pre-market trading on news that the rescue package for General Motors Corp. (NYSE:GM) has been increased. The market still will have to navigate a series of economic reports this morning, including information on home prices, manufacturing and consumer confidence. The Dow was expected to open 75 points higher, while the Russell 2000 (NYSE:IWM) was seen up 0.6%, near 469.00.
The Treasury announced plans to buy a $5 billion stake in GM’s financing arm, GMAC. In turn, GMAC said that it will immediately resume financing and that it will modify credit criteria to include retail financing for customers. In addition to the $5-billion for GMAC, the government also increased the loan to GM by another $1 billion, adding to the $13.4 billion announced back on December 19.
In overseas trading, Europe shares were flirting with a 1% advance heading into the U.S. open. In Asia, Japan was up 1.2%, Taiwan up 3.9%, Australia up 0.9% and India was up 1.9%. On the downside, China was off 1.1%, Hong Kong down 0.6% and Singapore down 0.5%.
Crude oil prices edged lower overnight despite ongoing military action in the Gaza Strip, where Israeli forces have rejected truce and Hamas leaders have said they will continue with rocket launches. The U.S. dollar is down about 1.2% against the euro, which could provide some support to commodities early today.
The chart picture remains stuck in a sideways consolidation and needs to push through 491 on the upside or 450 on the downside to suggest a more meaningful breakout move is at hand. Looking at today’s action, resistance is at 473, 481 and 491. On the downside, support is at 461 and 452.50.
