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The Dow Futures Report

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US Stocks Start The Summer Party Early

Tue, May 19 2009, 04:42 GMT
by Paul Brittain

Alaron

US STOCKS START THE SUMMER PARTY EARLY. EQUITIES REBOUND FROM LAST WEEK’S FALL LED BY ENERGIES, FINANCIALS, HOME BUILDERS.

US EQUITIES rebounded in an early start to summer on Monday after last week’s near 5 % drop, as confidence grew in key lynchpins sectors of economic recovery. The housing sector received a double barrel of support today as Lowes, the second largest US home improvement retailer, beat analyst’s profit expectations. In addition, a report on US homebuilder sentiment came in at that strongest level since September of 2008. Rising consumer confidence and housing turnover offered a significant boost to housing sector stocks.

Financials rebounded after Goldman Sachs upgraded Bank of America stock to a “conviction buy” The financial sector gained as buyers took an optimistic view on banks progress in raising capital and mortgage creation/refinancing. Many analysts feel that the market is absorbing the new issues of equity well and that this could lead to a number of financial institutions being able to repay TARP funds effectively.

Energy shares followed in the wake of strong economic sentiment after crude oil closed at its highest levels since November, driven up by fundamental concerns and pre Memorial Day positioning. Material stocks also gained as copper prices moved up nearly 5 cents, recovering from last week’s pullback.

Technically, June Dow futures should be coming under the influence of increased price volatility. Resistance should form at 8517, while support within this near term channel forms at 8263.

Published on  Tue, May 19 2009, 04:53 GMT