Preopen Trading: Wait for Data Spells Uncertainty for Market
(Updated from 7:09 a.m. EDT)
Are investors going to see the market rally today?
That's what we'll find out when the
Producer Price Index
(
definition |
chart |
) and
retail sales
(
definition |
chart |
source
) reports are released at 8:30 a.m. EDT. The core PPI, which excludes food and energy prices, is expected to rise 0.1%.
These key economic data will provide clues about whether the
Federal Reserve will raise interest rates. If the wholesale and retail sales indicators show that the economy is continuing to slow down a bit, fears of higher interest rates will be allayed and the market will likely see its gains continue.
In anticipation of this morning's reports, the
S&P 500 futures on
Globex
were up 1.5 to 1511, about a half point above
fair value as calculated by
Prudential Securities
, and suggesting little about the opening.
This week's strong second-quarter earnings for tech companies, including
Yahoo!
(YHOO)
and
Ariba
(ARBA)
, have encouraged investors to embrace technology stocks once again. In early action, the thinly traded
Nasdaq 100
futures were up 6.5 to 4015, about 11 points above fair value as calculated by
TheStreet.com
, and indicating a modest bounce at the opening for the
Nasdaq Composite.
After midsession trading, Germany's
Xetra Dax
was up 2%. France's
CAC 40
was ahead 0.5%, while the U.K.'s
FTSE 100
improved 0.3% (see today's
European Midday Update for more). Japan's
Nikkei 225
rose 0.6% overnight, while Hong Kong's
Hang Seng
declined 0.8% (see today's
Asian Markets Update for more).
Earlier: Tech Strength Continues Overseas
LONDON -- European investors continued to pile out of industries such as pharmaceuticals to buy technology shares Friday morning in a continuation of yesterday's action.
Some of Thursday's biggest gainers remained strong this morning in Germany, including
Ariba
(ARBA)
, which gained 6.60 euros, or 5%, to 138.60 euros ($129.79), and
Rational Software
(RATL)
, which jumped 6.50 euros, or 5.8%, to 119 euros. (Like most U.S. stocks, these companies are also listed on some foreign exchanges.)
Not all traders believe the early strength will hold throughout the day. "I wouldn't be surprised if the techs give back some of their gains as they've had quite a run," said one London trader, who asked not to be named.
Meanwhile, sectors that took a beating yesterday, like drugs, continued to suffer more neglect on Friday. Shares of
Merck
(MRK) - Get Report
declined 80 European cents, or 1.1%, to 73.20 euros, while
Eli Lilly
(LLY) - Get Report
was off 40 European cents, or 0.4%, to 102.10 euros.
In general, however, traders were hesitant Friday ahead of the U.S.
Producer Price Index
for June, due to be released at 8:30 a.m. EDT. Consensus calls for a 0.5% rise. Should the number come in higher, "it could make the market jittery as the inflation specter is always in the background," the trader said.
Also released at 8:30 a.m. EDT will be
retail sales
for June, for which analysts are expecting a 0.4% rise.
At 7 a.m. EDT, the September
S&P 500 futures were up 1.6 points to 1511.1, or 0.76 points above
fair value as calculated by
Prudential Securities
, which is little indication for the open. The thinly traded
Nasdaq 100
futures were up 6.5 to 4015, or 11.17 points above fair value as calculated by
TheStreet.com
, indicating a slightly bullish open for large-cap tech stocks in the early going. Fair value helps determine the tone of futures trading, often a good indication for how the securities market will open.
