Stocks seen lower on profit-taking
U.S. stocks are expected to open lower, pulled down by profit-taking from Friday’s rise despite gains in European and Asian trading. Overseas companies with large revenue ties to American customers were solid performers overnight following talk that President-elect Obama’s plan will include some $300 billion in tax cuts. The Dow is expected to open about 70 points lower, while the Russell 2000 (NYSE:IWM) is seen down 0.6% near 502.75.
Over the weekend, two Federal Reserve officials talked up the role of aggressive fiscal stimulus, which ramped up enthusiasm about the incoming administration’s plans to spark recovery through spending programs.
Copper and zinc futures markets were limit up in China trading amid hopes that re-indexing of commodity funds will boost industrial metals. Mining shares were firm overnight and remain a sector to watch in U.S. trading today. Within the commodity theme, crude oil prices slipped into negative territory ahead of the U.S. open, giving back decent overnight gains amid geopolitical tensions.
In overseas action, European markets rose more than 1%, while Asia also gained about 1%. Japan rose 2%, Hong Kong nearly 3.5%, China 3.5%, Taiwan 2.3%, Singapore 5.2%, India 3.1% and South Korea 1.7%. Australia edged lower, dipping about 0.7%. European investor confidence rose for the first time in seven months after hitting a record low last month.
The market will get a chance to respond to the latest vehicle sales numbers today. Overnight, it was reported that car sales in Japan plunged 22% and finished off 2008 with the worst showing in more than 30 years. Construction spending numbers also come in this morning, but take a back seat to several more important releases later this week.
The chart picture retains a positive slant after Friday’s solid close above important resistance points. The downside of that move is the rise late last week was accomplished on light volume. How the market fares this week on improved turnover and a raft of economic data could carry more weight from a psychological standpoint. For today’s session, resistance comes in at 514.50 and 525. Meanwhile, support is at 491, then at 484.
