George Goncalves Comments: U.S. Stocks Futures Up Slightly - Dow Jones News Service
Dow Jones News Service, December 28, 2009
U.S. stock futures were indicating a higher start as traders return from the Christmas break, with focus on a Treasury auction, while airlines were pointing lower after a foiled attempt to blow up a U.S. passenger jet on Christmas Day rattled the sector.
Futures for the Dow Jones Industrial Average were up 1 point to 10466, while those for the S&P 500 were up under a half point to 1122.4 and those for the Nasdaq 100 were up 3.75 points to 1871.75.
Volumes are still expected to be low, with the trading week shortened by the New Year holiday. The benchmark indexes managed to notch new closing highs for the year on Thursday, clinging to the slow-but-steady pace that has bumped them higher for much of this month.
The S&P 500 ended the trading week with a 2.2% advance to 1126. The Dow Jones Industrial Average gained 1.9% for the week, to 10520. The Nasdaq Composite gained 3.4% for the week, to finish at 2286.
No economic reports are scheduled for release on Monday, but plenty of data are on tap for the rest of the week, including Case-Shiller home prices for October and consumer confidence for December due out Tuesday, the Chicago purchasing managers index on Wednesday and weekly jobless claims on Thursday to close out the year.
Among stocks in focus, egg producer Cal-Maine Foods Inc. (CALM) reported earnings of 67 cents per share verses an expected 66 cents for its fiscal second quarter.
Kraft Inc. (KFT) could see action on a report that Ferrero S.p.A., the Italian confectionery company, has reiterated interest in joining the bid for U.K. chocolate maker Cadbury PLC (CBY). It was reported over the weekend that closely held Ferrero issued a statement confirming it is "still evaluating the possibility of acquiring the British sweets group," according to the U.K. Daily Mail online. A spokesman told Reuters that it has made no change to its stance.
Previously, Ferrero had expressed interest in Cadbury, but no statement has been made up to this point. Cadbury has been fighting a hostile $16.3 billion cash-and-stock bid from Kraft, which is seeking to acquire 90% of Cadbury's shares. That offer stands until Jan. 5.
Airlines were dipping lower on Monday, with AMR Corp. (AMR), which owns American Airlines, down 1.8% and Delta Air Lines Inc. (DAL) down 1.2%. Passengers are now facing tighter security after a Nigerian man on a Northwest flight from Amsterdam to Detroit tried to blow up the airline an hour before landing on Friday. He was foiled by other passengers.
A further security scare came on Sunday when officials detained a passenger who caused a disruption aboard Northwest Airlines Flight 253 from Amsterdam, the same flight involved in Friday's terrorism attempt.
In Europe, markets were overtaking highs achieved last week when markets hit their best levels since October 2008, although corporate news was thin. Technology and utility stocks were edging higher. Greek stocks were also firmer after the government passed a 2010 budget on Dec. 24, aimed at trimming the country's burgeoning budget deficit and pulling it out of a deep recession.
Asia markets were also higher on Monday, with Shanghai leading the advance and Japan's Nikkei 225 ending at its highest level in four months. Shanghai stocks were supported by comments over the weekend from Premier Wen Jiabao, who indicated that his government will not rush to unwind its stimulus policies.
Markets are also keeping an eye on planned auctions of Treasury notes valued at $118 billion, with a $44 billion auction of two-year notes planned for Monday. Yields on 2-year notes were up 2 basis points to 0.97%, while yields on 10-year notes rose 3 basis points to 3.8%.
Value players "have not stepped in and that is starting to be troublesome as one can only discount the apathy in bonds as related to (the) year-end effect," said George Goncalves, head of fixed-income-rates strategy at Cantor Fitzgerald, in a note to investors. "It seems to us that books were closed early on this month and balance sheets along with it. The cash must be raised and that means expect this process to make for three interesting auctions."
The dollar was stronger against the yen overnight, with that and stronger-then-expected industrial-output data helping lift Japanese stocks. The euro last changed hands at $1.44.
Crude-oil futures were on the rise, hitting a reported four-week high above $78 a barrel, helped by a weaker dollar and petroleum-inventory draw downs. Bulls are expecting to push prices even higher with more traders out for the New Year holiday.
Among metals, Shanghai copper rose to a 16-month high on Monday, while gold futures rose 69 cents to $1,112.40 an ounce.
