US stocks to open lower in pull back ahead of housing data
The rally in US stocks following disappointing data on Monday shows we’re back to ‘bad news is good news.’ The US dollar fell and stocks rallied on Monday when manufacturing and industrial production data missed expectations and raised hopes that the Fed may choose to hold off on ending its forward guidance of zero-percent interest rates.
Housing data will be the main focus for currency markets on Tuesday and therefore could be a key driver of US stocks before the conclusion of the Fed’s two-day meeting tomorrow. Housing starts are expected to modestly fall to 1.04M while building permits are expected to rise slightly to 1.06M.
Given the 200 point-plus leap in the Dow Jones yesterday and mounting uncertainties surrounding Fed-policy, US stocks are expected to see a pullback on profit-taking at the open on Tuesday.
Technology shares in the S&P 500 rose by a collective 1.21% yesterday while healthcare stocks fared the best rising 2.19% as basic materials were worst performers falling -0.11%.
American Airlines is expected to open substantially higher on the news it will replace Allergan in the S&P 500 after the close on March 20. It is a forced switch since Allergan will soon be under the wings of Actavis. It’s a symbol of the renewed fortunes for the airline industry down to falling fuel costs that American airlines will join the top 500 companies in the US.
Earnings are expected from Oracle, Adobe Systems and Burlington Stores on Tuesday.
Futures suggest the:
S&P 500 will open 11 points lower at 2,070 with the
Dow Jones expected to open 85 points lower at 17,893 and the
Nasdaq 100 19 points lower at 4,351.
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