Modest opening rise on tap awaiting Bernanke
Small-cap stocks are expected to open moderately higher Tuesday, lifted by a dip in crude oil prices overnight, and by ideas that Monday’s declines were overdone. The Russell 2000 (NYSE:IWM) was up 0.3% in after-hours trading, which would translate to a cash opening near 743.25.
Gains should be curbed by losses in overseas stock markets, and by lingering concerns about financial shares following renewed credit crunch issues Monday and talk of large players raising capital again this morning.
Global equity markets were lower overnight, catching up with the big decline in U.S. prices on Monday. Japan was off 1.6%, Hong Kong down 1.8%, Singapore lost 1%, South Korea shed 1.5%, Taiwan lost 1.6%, Australia was down 1.5% and Bombay was off 0.6%. European shares also were slightly lower ahead of the U.S. opening, but got a mild boost from an upward revision in first-quarter GDP.
The market now awaits comments from Federal Reserve Chairman Ben Bernanke. He is slated to talk about the economy and field audience questions as he gives a speech via satellite to the Central Bankers’ Panel at an IMF conference in Barcelona. Bernanke is expected to deliver the speech around 9:00 a.m. ET.
Following the Bernanke speech, the market also faces factory orders data at 10:00 a.m. ET, and vehicle sales numbers throughout the day. General Motors Corp. (NYSE:GM) announced plans to close four truck plants and shift production away from large vehicles, which provided a lift to the stock heading into the opening. General Motors shares were up about 2.2% in after-hours action.
Other stocks of note overnight included Lehman Bros. (NYSE:LEH), which at one point overnight was down about 2% on reports that the firm would raise capital by selling stock. However, Lehman responded to those reports by saying that capital raising was only one option under consideration, which sparked a recovery move into the green for the firm’s stock. Another financial firm, State Street Corp. (NYSE:STT), was off 2%, also on talk that the firm would raise capital. On the plus side, luxury home maker Toll Brothers Inc. (NYSE:TOL) was up 1.6% after beating the earnings forecast, and Marvel Entertainment Inc. (NYSE:MVL) rallied almost 3% as the stock will move into the S&P 500.
From a charting standpoint, the Russell 2000 formed a nice double bottom on the lows on hourly charts during Monday’s session near 733.65, which helped fuel a decent bounce off the intraday lows. If the market is unable to sustain the overnight rise, then that double bottom will be the key short-term support to watch today. Above that point, support is also near 735. On the upside, resistance comes in at 743.50 and 750.
