Russell 2000 seen slightly lower on the opening
The Russell 2000 (NYSE:IWM) is expected to open slightly lower, pulled down by weakness in European shares overnight, and by analyst downgrades in the banking sector. The Russell 2000 and S&P 500 futures were both off about 0.1% this morning, which would translate to an opening near 723.50.
Bank of America trimmed its outlook for some key firms in the banking sector, including Lehman Bros. (NYSE:LEH), Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS), all three of which were trading lower in after-hours action.
As usual, crude oil remains a key focus for equities to start the holiday-shortened week. Crude oil prices jumped back up near $133 dollars a barrel overnight, lifted by unrest in Africa, which could curb supplies.
Deutsche Bank lowered its rating overnight on Budweiser (NYSE:BUD), saying that the stock was now overvalued following the big rally late last week on talk that the American brewer was a takeover target.
In other analyst rating news, Citigroup lowered its outlook for General Motors Corp. (NYSE:GM), which tumbled about 1.4% overnight. Also, Merrill Lynch upgraded Slumberger (NYSE:SLB), which rallied about 0.4%.
Looking at today’s action in the Russell 2000, key short-term support is visible on intraday charts at 720.50. If that support cracks today, then the next downside points to watch are at 714.50 and 712.50. Meanwhile, any recovery rally should attract sellers up at 731 and 735.
The market will receive economic data later this morning at 10:00 a.m. ET on consumer confidence and new home sales, which could inject some volatility.
