Lower open on tap as crude oil tops $130
Small-cap stocks are expected to open lower, pulled down by fresh record highs in crude oil prices overnight, and by slumping values for the U.S. dollar. The Russell 2000 (NYSE:IWM) was off about 0.2% in after-hours trading, which would translate to a cash opening near 733.50.
Crude oil prices topped $130 dollars a barrel in overseas trading, which pulled down European shares from positive territory into negative ground. Heading toward the U.S. open, European stocks were down about 0.5%, while other worldwide indices were mixed. Japan was down 1.6%, Hong Kong up 1.1%, China up 1.9% and Australia down 1.4%.
The U.S. dollar took yet another hit versus the euro, losing about 0.7%, while hitting a fresh three-week low. In addition, the dollar was down about 0.3% against the yen, which helps fuel the bullish oil trade and lift other commodities as well.
Many of the individual large caps in the news overnight were actually on the upside, with Time Warner (NYSE:TWX) up about 3% after announcing they would spin off the cable division. Intuit Inc. (Nasdaq:INTU) was up over 3% on solid earnings. Meanwhile, Micron (NYSE:MU) was up 2% on an analyst upgrade. Despite these isolated snippets of good news, large-cap index products were still in the red overall heading toward the open.
Economic data is on holiday today in the United States, but this afternoon at 2:00 p.m. ET, the FOMC will release minutes from the previous meeting, which could stir up a little volatility, especially in the credit arena.
Look for support today in small caps first at 731, then at 726 and 720.50. On the upside, initial resistance is at yesterday’s highs near 738.50, then at 744 and 750.
