Russell to open near steady levels
Small caps were expected to open near steady levels this morning, with caution from another jump in crude oil offset by enthusiasm about a new large-cap acquisition. In overnight trading, the Russell 2000 (NYSE:IWM) was basically flat, while S&P 500 futures were just modestly above fair value.
The weekly unemployment claims report came in a little better than the forecast at 365,000 versus the expectation for 375,000. Equity futures were little changed immediately after the data.
Stock market activity overnight was flat to lower, with European shares hovering near steady levels, while Asia stocks were primarily lower. Hong Kong was off 1.6%, China down 1.9%, Singapore down 1.1% and Bombay lower by 1.9%.
There was news of a large-cap acquisition overnight between NRG Energy (NYSE:NRG) and Calpine Corp. (NYSE:CPN), in an $11 billion stock deal that could energize the bullish argument somewhat today.
Other big caps in the news this morning included Pfizer Inc. (NYSE:PFE), which was off about 1.5% on news that their anti-smoking drug had side effect issues. Also, NetApp Inc. (Nasdaq:NTAP) was down a whopping 14% as the firm’s projected earnings and revenues were below analyst expectations. PetSmart Inc. (Nasdaq:PETM) shares were off more than 5% overnight on lower-than-expected forward guidance.
Crude oil spiked higher yet again overnight, this time topping $135 dollars a barrel, which could put a damper on things today. Crude oil prices have more than doubled in a year, which limits consumer discretionary spending and hampers economic growth.
Even though crude oil was higher overnight, the U.S. dollar stabilized against the euro, and was up modestly after sinking to three-week lows yesterday. The greenback was also firm versus the yen heading toward the opening.
The market fell hard Wednesday afternoon, and closed below opening levels for the fourth consecutive session, which is a relatively rare (it hasn’t happened since January). If the sellers remain the dominant force today, then the market could test support at 720.50. If a recovery move gets kick-started, then resistance is at 731 and 735 (with some attention around the 732.50 point).
