Mild opening gains seen; Geithner confirmation sparks hope
U.S. stocks are expected to open modestly higher, with support tied to the confirmation of Timothy Geithner as Treasury Secretary while weak profits hamper buying interest. Stocks in Europe and Asia were mixed overnight, with Europe down on weak metals and chemical firms, while Asia was up on takeover optimism. The Dow was expected to open 40 points higher, while the Russell 2000 (NYSE:IWM) was seen up 0.5% near 452.00.
On the earnings front, Texas Instruments Inc. (NYSE:TXI) missed the estimate after the closing bell Monday afternoon and DuPont and Co. (NYSE:DD) reported a loss and trimmed the 2009 forecast, which continues a gloomy earnings season.
Crude oil prices were off about $1 a barrel ahead of the stock market open, which could weigh on energy shares after that group was a major upside influence on Monday’s rally. Copper prices tumbled 5% in overseas trading last night amid ample supplies, which is a worrisome note for the global economy as copper is a key ingredient for building materials. The U.S. dollar was basically flat against both the euro and the yen this morning, while Treasury markets were modestly higher.
The chart picture for small caps shows that the market is trapped in a mini-range loosely defined by the inauguration day collapse. A decisive breach in either direction of that range (defined by 466.45 on the upside; 433.65 on the downside) would suggest a target move of some 33 handles. The late rally back above 450 Monday was a positive development; the market needs to hold above that point to bolster any bottoming argument, especially following last Friday’s weekly close, which was the lowest since the November lows.
