Stock Futures Pare Gains as Optimism Cooled by Data
NEW YORK ( TheStreet) -- Stock futures were paring gains Thursday after some economic data cooled positive investor sentiment that was fueled by optimism that a fall over the so-called fiscal cliff would be averted.
Futures for the Dow Jones Industrial Average were rising 58 points, or 53.89 points above fair value, at 13,015. Futures for the S&P 500 were up 7.90 points, or 7.17 points above fair value, at 1415. Futures for the Nasdaq were ahead by 17 points, or 13.73 points above fair value, at 2677.
The major U.S. stock averages surged Wednesday on fresh hopes that Democrats and Republicans will be able to work out a compromise during U.S. budget talks and avoid the fiscal cliff.
Both President Barack Obama and House Speaker John Boehner made positive statements about the progress being made on Capitol Hill."Investors may be beginning to price in an increased likelihood of a fiscal cliff resolution before year end, as President Obama leverages social media and his reelection to pressure Republicans to accept either a compromise or the blame for falling off the cliff," noted Sam Stovall, chief equity strategist at S&P Capital IQ. "What's more, each slightly better-than-expected economic report that is ignored by investors who are focused almost exclusively on the cliff, may serve as an additional turn of the winch that may ultimately catapult equity prices progressively higher once investors feel confident that an improving economy won't be derailed." S&P Capital IQ's Investment Policy Committee raised its 12-month S&P 500 target to 1550 from 1500, implying a 10% advance from the Nov. 28 close. The Labor Department reported Thursday that initial jobless claims for the week ended Nov. 24 were 393,000, a decrease of 23,000 from the previous week's upwardly revised figure of 416,000. The four-week moving average was 405,250, an increase of 7,500 from the previous week's average of 397,750. Continuing claims for the week ended Nov. 17 were 3.287 million, a decrease of 70,000 from the preceding week's upwardly revised level of 3.357 million. Economists were predicting Thursday that the Labor Department would report jobless claims of 390,000 and continuing claims of 3.323 million. The second estimate on U.S. third-quarter gross domestic product showed a rise of 2.7%, compared with the previous 2% growth estimate. GDP was forecast to rise by 2.8%. At 10 a.m., October pending home sales from the National Association of Realtors are predicted to have climbed by 0.8% after rising by 0.3% the previous month. Overseas markets were stronger Thursday amid optimism on U.S. budgetary negotiations. The FTSE 100 in London was rising by 0.85%, while the DAX in Germany was up by 0.78%. Japan's Nikkei average and Hong Kong's Hang Seng index each closed up by 1%. The Asian markets also got a lift as Japan's main opposition leader Shinzo Abe, who is tipped to become the next prime minister, continued to call for more aggressive monetary policy easing. Gold for February delivery was rising $7.60 at $1,726.40 an ounce at the Comex division of the New York Mercantile Exchange, while January crude oil contracts were up $1.08 at $87.57 a barrel. The benchmark 10-year Treasury was down 2/32, pushing the yield up to 1.637%. The dollar was off 0.27%, according to the
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