Rally extension seen after benign income, PCE data
Small-cap stocks are expected to open higher Friday, extending Thursday’s rise to the highest point since January after personal income and inflation data this morning were in line with expectations and in the wake of positive earnings news overnight from a couple of key tech stocks. The Russell 2000 (NYSE:IWM) was expected to open about 0.4% higher, which would translate to an opening near 748.
The personal income headline figure hit the forecast at a rise of 0.2% and the core PCE price index, which is said to be the Fed’s preferred inflation gauge, also nailed the forecast with a rise of 0.1%. The immediate reaction in stocks was about a three-handle rise in S&P 500 futures.
Dell Inc. (Nasdaq:DELL) topped the earnings forecast after the close Thursday and shares for the pc maker jumped about 10% overnight, setting the tone for a solid start to the day in the tech sector.
Crude oil was up and down overnight after Thursday’s slide back below $127 dollars a barrel. There is a sense among some traders that news of a sweeping CFTC investigation into energy market trading could help spur an exit of long energy trades and pressure energy prices, but that is still just a theory at this stage.
The U.S. dollar is slightly higher versus the euro and yen shortly after the personal income report was released. Additional dollar gains today would likely be seen as a supportive element for stocks, and bears watching as the day progresses.
Other large-caps of note in after-hours trade included American International Group (NYSE:AIG), which was up almost 3% after an upgrade by Morgan Stanley. Also Marvell Technology Group (Nasdaq:MRVL) beat the earnings projection and surged some 15% overnight. On the downside, J. Crew Group (NYSE:JCG) lowered guidance and Citigroup (NYSE:C) downgraded the stock, sparking a 17% decline. Sigma Designs (Nasdaq:SIGM) missed its sales forecast and dropped about 16%.
The market still has to navigate through Chicago Purchasing data at 9:45 a.m. ET, and the Michigan Sentiment survey at 10:00 a.m. ET.
