Futures bounce on renewed stimulus hopes
Also, concerns over China's liquidity conditions are easing.
By Matthew Kanterman
U.S. equity futures rose in early premarket trade after two Federal Reserve officials reiterated that tapering does not equal a switch to tight monetary policy. Minnesota Fed President Naryana Kocherlakota and Dallas Fed President Richard Fisher both said that scaling back quantitative easing does mean the end of stimulus (Benzinga).
In other news, fears over a Chinese liquidity crunch continued to grip markets overnight as the Shanghai Composite did not post any sort of a bounce after dropping 5% Monday. Concerns, however, are easing following remarks from Chinese central bankers. Meanwhile, economists continued to slash China growth forecasts as export growth continues to lag in the face of a weak global economy.
Also, watch housing stocks Tuesday as earnings from Lennar (LEN) are expected, as well as key housing-related economic data.
International Business Editor for the Telegraph in the U.K., Ambrose Evans-Pritchard, a noted economics and markets writer, wrote overnight that Italy may need a new bailout within six months.
S&P 500 futures rose 8.9 points to 1,575.10.
The EUR/USD was higher at 1.3122.
Spanish 10-year government bond yields fell 2 basis points to 5.1%.
Italian 10-year government bond yields fell 3 basis points to 4.81%.
Gold rose 0.67% to $1,285.70 per ounce.
Asian shares were mostly lower overnight on continued China fears. The Japanese Nikkei 225 Index declined 0.72% and the Topix Index fell 1.01%. In Hong Kong, the Hang Seng Index eked out a gain of 0.21% while the Shanghai Composite Index fell 0.18%. Also, the Korean Kospi fell 1.02% and Australian shares declined 0.28%.
European shares were higher in early trade as officials from both the Bank of England and the European Central Bank reiterated that easy-money policy will be around for some time. The Spanish Ibex Index rose 1.23% and the Italian FTSE MIB Index gained 0.88%. Meanwhile, the German DAX rose 1.46% and the French CAC 40 gained 1.38% while U.K. shares added 0.85%.
Commodities were bouncing overnight after metals declined Monday despite oil's outperformance. WTI crude futures rose 0.76% to $95.90 per barrel and Brent crude futures gained 0.75% to $101.92 per barrel. Copper futures bounced off of three-year lows, gaining 1.16% to $306.35 per pound. Gold was higher and silver futures gained 1.32% to $19.75 per ounce.
Currency markets were rather quiet overnight as the yen continued to strengthen on safe-haven flows as China fears continued to surface. The EUR/USD was slightly higher at 1.3122 and the dollar fell against the yen to 97.22. Overall, the Dollar Index fell 0.15% on weakness against the yen, the Canadian dollar, the pound, and the euro.
Earnings reported Monday
Key companies that reported earnings Monday include:
Mittel Networks (MITL) reported fourth quarter earnings per share of $0.25 vs. $0.24 expected on revenue of $150.9 million vs. $145.7 million expected.
Sonic (SONC) reported third quarter earnings per share of $0.26 vs. $0.26 expected on revenue of $146.63 million vs. $147.5 million expected.
Stocks moving in the premarket included:
Sonic (SONC) shares declined 3.88% as revenue missed estimates despite earnings per share being reported in-line.
J.P. Morgan Chase (JPM) shares rallied 2.34% premarket as the stock's dividend yield briefly crossed 3%. Investors piled into the stock on this in a hunt for yield.
PulteGroup (PHM) shares rose 1.86% premarket ahead of Lennar's earnings and much housing-related economic data.
Carnival Corp. (CCL) shares fell 0.96% premarket ahead of the company's earnings release.
Notable companies expected to report earnings Tuesday include:
Apollo Group (APOL) is expected to report third quarter earnings per share of $0.85 vs. $1.20 a year ago.
Barnes and Noble (BKS) is expected to report a fourth quarter loss of $0.99 per share vs. a loss of $0.98 per share a year ago.
Carnival Corporation (CCL) is expected to report second quarter earnings per share of $0.06 vs. $0.20 a year ago.
Lennar (LEN) is expected to report second quarter earnings per share of $0.33 vs. $2.06 a year ago.
Smith and Wesson (SWHC) is expected to report fourth quarter earnings per share of $0.44 vs. $0.17 a year ago.
Walgreens (WAG) is expected to report third quarter earnings per share of $0.91 vs. $0.72 a year ago.
On the economics calendar Tuesday, durable goods orders are due out followed by the weekly Redbook and the FHFA home price index. Also expected are the S&P Case-Shiller home price index, new home sales, and the Richmond Fed manufacturing index. In addition, the Treasury is expected to auction 4- and 52-week bills as well as 2-year notes.
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The idea of US crude being a shelter from turmoil abroad may not be as far fetched as it seems.
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