Lower opening on tap after earnings news
Small-cap stocks are expected to open lower Thursday, in line with a decline in overnight values. The Russell 2000 (NYSE:IWM) was down about 0.9% in after-hours action, which would translate to an opening for the cash index near 702.00. However, stock index futures were starting to slice into overnight declines after Weekly Claims data came in better than expected, which could lessen the opening dip in small caps as well. The overnight dip was tied to soft earnings from headline names Amazon.com (Nasdaq:AMZN), Motorola (NYSE:MOT) and Starbucks (Nasdaq:SBUX).
Before the regular opening, the market received the first batch of economic data since Tuesday’s existing home sales, which could also provide some fuel for trading action in addition to the ongoing focus on earnings results. The weekly claims numbers were better than expected at 342,000 versus the forecast of 375,000, but the durable goods data came in at -0.3%, which was worse than the +0.1% estimate. In all, the reports appeared to be a mixed bag for the market, but S&P 500 futures did bounce off the lows after the numbers came out.
Overseas stock markets were mixed, with Japan down, Hong Kong up and Europe mostly lower. The retreat in Europe shares appeared to have the biggest impact on U.S. equities in overnight action. The U.S. dollar was firm against both the euro and the yen, which could provide a lift for the market during the U.S. trading day.
On the chart front, the Russell 2000 sports a little head and shoulders top on intraday studies, which is a short-term caution signal. If the market slips through 700 support today, then the pattern projects a potential slide down to the 685 zone. As for support this morning, the first line in the sand is drawn at 700, then at 695 and a freefall window down to 685. On the upside, resistance is pegged at 715 and 724.
