Mild opening dip seen on weak earnings, Asia slip
Small-cap stocks are expected to open slightly lower Wednesday, pressured by weak earnings results, lowered corporate outlooks and another pullback in Asian stocks overnight. Stock index futures were down about 0.6% ahead of the U.S. open, which suggests a Russell 2000 (NYSE:IWM) opening near 479.50.
Stock futures were hovering near steady levels, but took a turn lower when Best Buy Co. Inc. (NYSE:BBY) lowered its 2009 outlook dramatically. BBY shares were down some 12% in pre-market trading.
Soft themes popped up in on several earnings reports heading into the open, including a variety of businesses such as fertilizer company Intrepid Potash Inc. (NYSE:IPI), which missed the forecast; NBTY Inc. (NYSE:NTY) as the manufacturer of nutritional supplements also missed the forecast; and small-capper sausage and restaurant operator Bob Evans Farms Inc. (Nasdaq:BOBE) lowered its outlook and was off about 2.5% in pre-market trading.
Japan’s Nikkei was down 1.3% overnight, and an index of Asian stocks was off 1.4%; more severe declines were seen in India, which tumbled 3.1% and are down 9.5% over the last two days.
Crude oil prices have been sinking lately and slipped below $58 a barrel in European trading, which could continue to weigh on energy and commodity-related stocks. The U.S. dollar was hovering near steady levels against the euro, but climbed well off the overnight lows.
The chart picture retains a bearish posture here. If the Russell opens below 480 as expected, that will breach a little support zone that formed on intraday charts. Below 480, there is mild support at 474, then a better test down at 462. If the market is going to form an inverted head-and-shoulders bottom, then a hold near 474 followed by a rally is necessary.
