Stock Futures Rise Despite Weak Manufacturing Data
NEW YORK ( TheStreet) -- Stock futures were rising Monday despite a worse-than-expected New York State manufacturing report and amid signs of progress in the U.S. "fiscal cliff" talks and as Apple (AAPL) shares pared losses from a Citigroup downgrade.
Apple shares were off 0.72% to $506.02 in premarket trading, following a slump to $498, after the stock was downgraded to neutral from buy and the price target cut to $575 from $675 by Citigroup analyst Glen Yeung, as near-term supply chain order reductions raised questions about the strength of the iPhone5.
Apple said sales of the iPhone 5 in China has exceeded more than 2 million since it launched the device there on Friday.
On the U.S. "fiscal cliff" front, Republican House Speaker John Boehner seems to be in the process of yielding to some of President Barack Obama's main demands including higher tax rates for wealthy Americans, as both sides work toward avoiding falling over the so-called fiscal cliff of tax hikes and spending cuts at the end of the year.Boehner has suggested an increase in taxes on Americans with incomes exceeding $1 million. Futures for the Dow Jones Industrial Average were rising 31 points, or 58.99 points above fair value, at 13,118. Futures for the S&P 500 were up 6 points, or 8.52 points above fair value, at 1415. Futures for the Nasdaq were up 10 points, or 11.06 points above fair value, at 2633. Michala Marcussen, global head of economics at Societe Generale, said that while Boehner's tax proposal is positive, it's still a much higher level of income than the $250,000 proposed by the Obama camp and would leave a "gaping" hole in reaching Obama's $1.4 trillion revenue target. Therefore, "the divide between the two camps still remains significant," said Marcussen. "Should no agreement result and the full $600 billion cliff go into effect, this would prove highly disruptive for both markets and the economy," said Marcussen. "In such a tail risk scenario we set a 90% probability that the retroactive legislative legislation then passed in early 2013 would reverse part of the cliff." On Monday, the New York Federal Reserve's Empire State manufacturing survey showed a worse-than-expected read on the general business conditions index of negative 8.1 for December, down from negative 5.2 the prior month. Economists, on average, were expecting an improvement to negative 1 in December. "This is a pretty negative report with prices received weaker, new orders negative and even the positive elements merely less weak," said David Ader, strategist at CRT. Japan's Nikkei average finished up 0.94% on Monday following the victory of the Liberal Democratic Party, which the markets believe could pave the way for more rate cuts by the Bank of Japan. Hong Kong's Hang Seng index closed down by 0.42% as shares of oil producers and HSBC declined. The FTSE 100 in London was sliding 0.52% and the DAX in Germany was up 0.01% Monday because of apprehension over the U.S. budget talks. Gold for February delivery was falling $5.90 at $1,691.10 an ounce at the Comex division of the New York Mercantile Exchange, while January crude oil contracts were off 18 cents at $86.52 a barrel. The benchmark 10-year Treasury was slumping 5/32, raising the yield to 1.724%. The dollar was up 0.03%, according to the
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