Stock Futures are higher and will look to reverse Wednesday’s modest losses. Yesterday saw a downturn in stocks for the first time in seven sessions. Extremely disappointing housing data and a weaker than expected preliminary read on manufacturing purchases had investors finally taking some profits. Despite the break in the rally, positive earnings reports from Apple (AAPL) and Facebook (FB) immediately had equity futures sharply higher after the close of trading. The CBOE Volatility Index (VIX) finished Wednesday’s session only modestly higher despite the widespread selling in equities. Volatility should remain low in the near-term unless we see a catalyst to send stocks down. Although many market watchers are predicting a correction, these overbought conditions can continue much longer than expected.
Treasuries are lower today after a nice rally yesterday. The 10-year yield broke through the 2.7% level to the downside but should test 2.7% again today. European shares gained on the backs of U.S. stocks overnight. Earnings have mostly out-performed and M&A activity continues to be robust. Ultra-low interest rates are opening up opportunities for companies to borrow at low rates and synthetically prop up their quarterly results. Escalation of tensions in Ukraine may be the one thing that could potentially halt the stock gains. Earnings will continue to drive markets today and may continue to lead us to new equity highs.
Stock Stories:
Facebook (FB) –Liked – The social media leader posted better than expected quarterly results after the close yesterday. The company continues to show growth but concerns remain for monetizing its ad revenue and its recent acquisitions. The shares are up about 3% ahead of the opening bell.
Caterpillar (CAT) – Earth Moving – The industrial equipment-maker posts better than expected quarterly results this morning on solid sales growth. The stock is up better than 3% in the pre-market.
