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Stocks May Move To The Upside In Early Trading - U.S. Commentary


After moving mostly higher last week, stocks could see some further upside in early trading on Monday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 48 points.

Stocks futures have held on to their earlier gains following the release of a report from the Commerce Department showing slightly stronger than expected personal spending growth in the month of March.

The Commerce Department said personal spending climbed 0.2 percent in March following a 0.7 percent increase in February. Spending had been expected to edge up by 0.1 percent.

At the same time, the report showed that personal income also rose by 0.2 percent in March after surging up by 1.1 percent in February. Economists had expected income to increase by about 0.4 percent.

With personal income and spending increasing at the same pace in March, the personal saving rate was unchanged at 2.7 percent.

Paul Dales, Senior U.S. Economist at Capital Economics, said, "March's U.S. personal income and spending figures support our view that economic growth won't slow too sharply in the second quarter."

Not long after the open, trading could also be impacted by the release of a report from the National Association of Realtors on pending home sales in the month of March.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

In corporate news, shares of J.C. Penney (JCP) are likely to see early strength on the heels of news that the department store operator has received a five-year, $1.75 billion loan commitment from Goldman Sachs (GS).

Contraceptive devices maker Conceptus (CPTS) is also likely to move higher at the open after agreeing to be acquired by Bayer for $1.1 billion or $31 per share. The price represents a nearly 20 percent premium to Conceptus' closing price on Friday.

Stocks turned in a lackluster performance during trading on Friday, as traders digested disappointing data on first quarter economic growth. A mixed reaction to the latest batch of earnings news also contributed to the choppy trading.

The major averages eventually ended the session mixed, with the Dow posting a modest gain. While the Dow edged up 11.75 points or 0.1 percent to 14,721.55, the Nasdaq fell 10.73 points or 0.3 percent to 3,279.26 and the S&P 500 dipped 2.92 points or 0.2 percent to 1,582.24.

Despite the mixed performance on the day, the major averages all moved higher for the week. The Dow rose by 1.1 percent, while the Nasdaq and the S&P 500 advanced by 2.3 percent and 1.7 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Monday, although the Japanese and Chinese markets were closed for holidays. Australia's All Ordinaries Index rose by 0.5 percent, while Hong Kong's Hang Seng Index edged up by 0.2 percent.

The major European markets have also moved to the upside on the day. While the U.K.'s FTSE 100 Index has edged up by 0.1 percent, the German DAX Index has advanced by 0.4 percent and the French CAC 40 Index has jumped by 1 percent.

In commodities trading, crude oil futures are climbing $0.30 to $93.30 a barrel after jumping $4.99 or 5.7 percent to $93 a barrel in the week ended April 26th. Gold futures, which rose $58 or 4.1 percent to $1,453.60 an ounce last week, are rising $15.10 to $1,468.70 an ounce.

On the currency front, the U.S. dollar fell 1.5 percent against the yen last week to 98.06 yen. Meanwhile, the greenback edged up 0.2 percent against the euro to $1.3030. The dollar is currently trading at 97.77 yen and is valued at $1.3089 versus the euro.

by RTTNews Staff Writer

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