Tuesday, August 16, 2011 9:21 am EDT
S&P 500: 1204.49
Yesterday’s post indicated that the upmove starting Friday would be hard-pressed to top DJIA 11,495 (S&P 500: 1209) without big news out of Europe and/or the economic reports due here in the United States.
The U.S. stock-index futures are indicating a decline at the open, suggesting that resistance level has merit. Stock prices were marked up in a vacuum of light trading Friday and Monday. A good Industrial Production number today at 9:15 may help stabilize the weak open.
Talk of a Fed QE3 is making the rounds and the Fed meets at Jackson Hole next week. QE1 worked, and QE2 did more for the stock market than the economy, triggering gains between the end of August 2010 and early May 2011 of 30% for the DJIA and as much as 47% for the Russell 2000.
The August 11, Empire State Manufacturing Survey reported yesterday fell short of expectations. Housing Starts for July reported at 8:30 today were down 1.5%. Industrial Production was up 0.9 percent for July vs 0.4 percent in June, (a surprise), Jobless Claims are due Thursday, and the Philly Fed (business conditions) Survey, Leading Indicators are due on Friday.
If the Producer Price (Wed.) and Consumer Price (Fri.) indices are flat-to- down, the Fed may read that as a green light for QE3. With approval ratings dropping in face of a limping economy, the Obama administration and Fed can be expected to accelerate other measures to stimulate the economy.
The big news today is the Brussels meeting of eurozone leaders, including Germany’s Chancelor Angela Merkel and France’s President Nicolas Sarcozy. At worst, expect statements by both of an intent to head off an ultimate collapse of the euro. At best we get definitive info about how that will be done. If the crisis is diffused, the markets will move higher. Business as usual is a downer.
As if Europe doesn't have enough problems, Q2's GDP in the 17-nation euro region rose less than projected, posting a gain of only 0.2 percent vs 0.8 percent in Q1, raising concerns of another recession there.
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