The U.S. stock market is poised for a positive start this morning, after putting in a mixed session yesterday. As we were preparing this report, the S&P 500 Index futures were moving higher in early morning trading. Today, investors may be feeling better about the financial sector, as a large batch of banks just passed the Federal Reserve’s annual stress test. In addition, a constructive report from a major semiconductor company may help sentiment.
In economic news, a couple of notable reports were released early this morning. Specifically, initial jobless claims came in at 239,000 for the latest recorded week, which was a lower number than had been expected. In addition, the third estimate for first-quarter GDP (Gross Domestic Product) showed the economy expanding at 2.0%, which was ahead of the consensus view. Later this morning, pending home sales for the month of May will be reported. It is worth mentioning that tomorrow will also be an important day for economic news. Specifically, the PCE (Personal Consumption Expenditures) Price Index for May will be published. This report is closely watched by the Federal Reserve, and accordingly should also receive some attention from Wall Street. The numbers are expected to show that inflationary pressures have been moderating, but remain above the central bank’s 2.0% target range.
In the corporate arena, traders received a report from a widely-held technology company after the market closed yesterday. Specifically, Micron Technology (MU) posted better-than- expected numbers, and provided some positive comments. According to the company, the memory chip market, which had experienced an inventory buildup, finally seems to be stabilizing. A more- balanced supply/demand equation should lead to better pricing and wider profit margins. Given Micron’s size, the report likely has implications for other companies across the technology sector. Later today, we will hear from NIKE, Inc. (NKE), a leading manufacturer of footwear and clothing. Investors will be looking to see how consumer demand has been holding up in North America, and also in China, which is a major market for the company.
From a technical perspective, the S&P 500 Index encountered resistance around the 4,450 level a couple of weeks ago. Many investors had expected that a pullback might develop, so the move did not come as a major surprise. Sometimes, a period of consolidation can be constructive, as it allows traders to move capital out of stocks that have already advanced and into overlooked issues. This can make for a more-balanced market, and is likely healthy in the long run. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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