U.S. equity futures are pointing to a slightly higher open. We had some big swings lower yesterday but the Bulls took control in the last few minutes of the day as most major indices settled flat. Investors will be watching the new home sales report due out at 9:00 am CT for clues about how the harsh winter weather may have affected not only the housing industry, but other facets of the economy. In addition to the housing data, investors will receive data on the weekly energy inventories. The inventories will also provide us with information about the impact of weather on the economy as crude (/CL) and natural gas (/NG) prices had been trending higher. Volatility was higher for most of the session until the last few minutes of the day as it fell sharply on the stock rally. The CBOE Volatility Index (VIX) is now below $14 again. The ‘Fear Gauge’ is once again in a tight range near its 50 and 200-day moving averages.
Bonds are slightly lower today after a solid rally yesterday. The 10-year yield remains just above 2.7% and in a tight range. Asian shares mostly rose but European equities are adding to losses from yesterday, while U.S. stock futures are pointing to a positive open. The Shanghai Composite increased 0.35% to end a four-day slide but the market remains jittery. In the U.S. both hawks and doves at the Fed appear intent on continuing to taper QE this year in an attempt to begin to normalize policy on the assumption that the economy and housing can stand on their own feet, though housing erosion has also been masked by the persistent severe winter weather, notwithstanding the usual seasonal adjustments. This should also be reflected in today's release of new home sales, in addition to coloring recent existing home sales and housing starts reports. Retailers continue to release quarterly results this week as the earnings season wraps up.
Stock Stories:
Target (TGT) –No longer Tar-Jay – The retailer posted an earnings beat this morning despite the holiday season credit card breach. The company stated that they are not able to estimate future expenses related to the data breach. The retailer sees FY14 sales below expectations but the shares are up slightly ahead of the opening bell.
Major Economic Reports:
6:00 am CT – MBA Purchase Applications – Down 8.5% for the week
9:00 am CT – New Home Sales
9:30 am CT – Oil Inventories
11:00 am CT – Fed’s Rosengren Speaks
12:00 pm CT – 5-year Note Auction Results
6:30 pm CT – Fed’s Pianalto Speaks
Notable Earnings:
Before Market: ANF, BUD, CHK, DLTR, LOW, SODA, TGT, TJX
