Two hours before the opening bell and one hour before three major data points hit the markets, stocks are looking to recovery from yesterday’s modest decline.
Futures on the Dow are trading 40 points higher at 10,445 while those on the S&P 500 are up 5.25 points to 1,108.
The US dollar is in 15-month rut this morning, “as risk appetite was boosted by some decent data and positive central bank talk,” according to BMO economist Benjamin Reitzes.
In line with recent trends, greenback weakness is driving up commodity prices of dollar-denominated assets. WTI Crude oil is up 23 cents to $76.25 per barrel and Spot Gold is up $10.42 to $1,179.82 per ounce. Reitzes notes that base metals too are stronger, “led by lead, zinc and copper, and grains prices are up about 1%.”
With markets closed tomorrow and Friday's schedule empty, today’s schedule is simply packed with important data.
8:30 ― Durable Goods Orders are set to improve by 0.5% in October, following the 1.0% gain in September. The spectrum of forecasts is wide but all are positive, ranging from +0.1% to +1.8%.
Analysts from IHS Global Insight are on the top end of that spectrum, but their forecast is based on temporary boosts rather than sustainable trends.
“Durable goods should get some positive help from volatile sectors in October, with aircraft orders rising and more than offsetting an expected pull back in defense orders,” analysts wrote in a weekly note. “A recovery in reported motor vehicle orders is long overdue given the rise in production since June, and core capital goods orders should improve again.”
8:30 ― October’s Personal Income & Outlays report is expected to show spending and income both rising, but at different paces. Spending is set to advance 0.5%, erasing the prior month’s 0.5% fall and building on the 1.4% jump in August. Income is less impressive: after a flat reading in September incomes should rise 0.2%.
“After adjusting down in September due to the end of the Cash for Clunkers program, personal consumption expenditures (PCE) are expected to rebound in October due to higher than expected auto sales,” said forecasters from BBVA. “Furthermore, strength in retail sales excluding autos indicates that demand is picking-up modestly outside of that sector as well. If auto sales remain fairly stable in the fourth quarter, consumption could increase at a small rate.”
8:30 ― The Initial Jobless Claims report has seen 505k claims in each of the past two weeks. For the week ending Nov. 21, analysts are expecting new claims to fall below 500k for the first time in more than a year. That’s still far from indicating growth, but the event could be significant as investors worry that about the jobless recovery.
“We look for initial jobless claims to have fallen by 15,000 to 490,000 in the third week of November,” said analysts from RDQ Economics. “On our forecast, the four-week average of claims would fall 10,500 to 503,500.”
10:00 ― Current conditions and the six-month outlook each drove the preliminary Consumer Sentiment index lower in early November. Two weeks later, it’s unlikely much has changed for the better. The 66.0 score is expected to be revised to 67.0, with forecasts ranging from 66.0 to 69.0.
“The tug-of-war over consumer psyches between climbing joblessness and rising equities should keep the [index] fairly steady at low levels in November,” said analysts from BMO Capital Markets. “But consumer spirits have at least picked up enough in recent months to spur some shopping.”
10:00 ― New Home Sales fell a considerable 3.6% in September, ending five months of gains. Moreover, revisions to the prior three months trimmed earlier advances. For October, the annual pace of 402k sales is set to rise to 410k, while supply on the market ― currently at a 27-year low ― should shrink slightly from the current overhang of 7.5 months.
“Sales remain extraordinarily low relative to trend levels and, we believe, have further to climb,” said analysts from Nomura, who look for a 2.5% advance to 412k. “Although we expect sales to increase, we see downside risks to this forecast due to the originally-scheduled expiration of the first-time homebuyer tax credit (the credit has since been extended through April 2010). If in fact the program boosted demand over the summer, sales could sag in these autumn months.”
- Treasury Auctions:
- 1:00 ― 7-Year Bills ($32 billion)