Russell poised for mild opening dip
Small-cap stocks are expected to open slightly lower this morning, in line with a very mild overnight dip in equities. The Russell 2000 (NYSE:IWM) was down about 0.1% in after-hours trading (trimming earlier declines), which would equate to near 724 at the start of today's trading.
Large-cap futures were pulled down overnight by soft earnings from Visa (NYSE:V), which was down some 4%. In addition, Merck & Co. (NYSE:MRK) was off more than 7% on news that the FDA rejected a new cholesterol drug from the pharmaceutical firm.
Overseas stocks were mixed overnight, with Japan flat, Hong Kong up 0.9%, and European shares down some 0.3% after Deutsche Bank generated its first quarterly loss in five years and Michelin tumbled about 8% on weak earnings.
Some of the buyer reluctance from late yesterday and overnight may be tied to jitters in front of today’s 10:00 a.m. ET Consumer Confidence report, especially after the University of Michigan’s sentiment survey slumped to 26-year lows last week, and sparked a brief slide in equities.
From a charting standpoint, when the Russell 2000 pushed to three-month highs yesterday, it left the market in an upside resistance vacuum, with the next noteworthy point up at 731, which represents a double top from early February. However, short-term support is more clearly defined, and comes in today at 720, 714 and 708.00. It should also be noted that many traders are watching the 1,400 level in the S&P 500, which has been rejected so far.
On the supportive side of things this morning for the equities market was that the U.S. dollar was up 0.7% versus the euro, and crude oil was down as the North Sea shutdown ended, allowing that production to come back online in coming days.
