The decade started off well yesterday with all three US markets soaring by more than 1.50% yesterday. This morning the futures market looks to extend those gains ahead of the pending home sales index, even though investors believe the survey will show some cooling.
Two hours before the open, Dow Futures are 6 points higher at 10,525 after rising 156 points yesterday. The benchmark S&P 500 Futures is up a modest 0.25 points to 1129.00, extending the 17.89-point gain yesterday.
Meanwhile, commodity prices and the dollar are pretty flat. WTI Crude is slightly higher at $81.55 per barrel and Spot Gold is up 12 cents to $1121.32 per ounce.
Yesterday, the key ISM manufacturing index jumped to a 44-month high of 55.9. All five major components moved upwards including a 5.2-point jump in the new orders index to 65.5 ― the highest reading since May 2004. Investors looking for the December employment report to show the first positive gain in two years were also encouraged by the 52.0 reading in the employment component.
“Buoyed as well by a steadily declining trend of jobless claims, the ISM employment index reinforces hopes that the two-year slide in overall employment is near an end,” wrote analysts from Nomura Global Economics. “Indeed, we expect non-farm payrolls to show a small gain of about 20,000 jobs in December.”
Key Events Today:
10:00 ― The Pending Home Sales Index beat most economists’ expectations in October when it climbed for a 9th consecutive month. The consensus this month is pretty unanimous that a drawback will be seen in November (consensus: -3.0%), but predictions are difficult because of the government incentive program which has been skewing the data upward.
HFE’s Ian Shepherdson wrote a typically cautious note: “Sales were massively boosted in the fall by the tax credit, which was originally scheduled to expire on November 30. Accordingly, we now expect pending sales to drop by about 10%, but this is a guess; be prepared to be surprised.”
Analysts from BMO added that while payback from heady gains should be expected in this morning’s survey, the extension of the tax credit to April “should continue to drive the market higher in the months ahead.”
10:00 ― Factory Orders rose 0.6% in October and are expected to rise another 0.4% in November. The index is little more than an expanded version of the durable goods report and thus gets scant attention from economists or the market.
- Treasury Auctions:
- 11:30 ― 3-Week Bills
