Tame open seen awaiting ISM data
Small-cap stocks are expected to start out the week on a steady tone, with support from another decline on inter-bank lending rates countered by caution into this morning’s ISM Manufacturing Survey and Tuesday’s national elections. The Russell 2000 (NYSE:IWM) finished out last week’s trading with four consecutive higher sessions, but still closed out October with historic losses.
Libor rates have been on the decline consistently and overnight hit the lowest point since the Lehman Brothers bankruptcy. The pullback on inter-bank rates reflects growing trust among banks and is seen by many as a proxy that clogged credit lines are starting to thaw.
This is a heavy week for economic data risk, and things kick off at 10:00 a.m. ET today with the ISM Manufacturing Survey and finish with a flourish Friday morning with the big employment report. The ISM figure is expected to come in at 42%, well below the 50% line that indicates contraction.
In company news overnight, The Boeing Co. (NYSE:BA) saw workers approve a contract offer, which should end a long-running strike at the airplane maker. BA shares were actually down a tad in pre-market trading, as the contract approval was already in the news last week. Analysts at Merrill Lynch downgraded their price target on rival Goldman Sachs Group Inc. (NYSE:GS).
Stock markets in Europe were firm ahead of the U.S. open, and Asian stocks were modestly higher, lifting the MSCI World Index up about 0.7% overnight. South East Asian market were particularly strong, with Singapore up 5%, Bangkok up 7.8%, Manila up 3.8%, Jakarta up 7.6% and Kuala Lumpur up 4.1%.
The chart picture shows bottoming promise now on daily and weekly charts, and even the monthly formation isn’t nearly as bad as it appeared a week ago at this time. Looking ahead to today’s action, support is at 526 and then at 514.50. Meanwhile, resistance is at 546.50 then at 562.
