US stock futures point to a higher open on Wall Street Tuesday following Monday’s decline. Better than expected economic sentiment numbers out of Germany is being credited for the increased risk appetite, and investors will also be anticipating the US Federal Reserve’s announcement on monetary policy. The German ZEW indicator rose by 1.4 points to minus 53.8 in December, breaking a nine-month downtrend.
Stocks continue to show indecision in a 2% range over the last several days. The rally over the last two weeks resulted from the announcement a massive coordinated liquidity initiative undertaken by world central banks, but it has stalled out as borrowing costs in Europe’s troubled economies has remained high. More intervention by the ECB may be required to propel the market further from here. Also boosting sentiment was news that the Spanish treasury sold more short-term notes at a lower yield than planned at Tuesday’s auction, although rates remain dangerously high.
The market continues to be held hostage by the European crisis and the barrage of unconfirmed reports that hit the newswires each day. Also, the tape is thin, with little size on the inside market, making it easy for the market to make quick jumps in both directions. This all makes for a difficult trading environment, and traders are responding by paring back activity in the market.
Stocks were pressured further yesterday before the open after Intel (INTC) lowered revenue outlook. The stock-specific news is a mixed bag this morning. Best Buy (BBY) is off more than 8% after disappointing with third-quarter earnings. On the flip side, clothier Urban Outfitters (URBN) is up almost 12% after strong numbers in its 10Q regulatory filing last night. Southwest Airlines (LUV) is UNCH after news that it has placed a firm order with Boeing (BA) (+1% pre-market) fpr 150 fuel-efficient 737 MAX planes for $19 billion. The order is the largest in the history of Boeing, which will deliver the planes when they enter service in 2017.
By John Darsie
Disclosures: Scott Redler is long SPY, AAPL