Mild rise on tap despite soft manufacturing, claims data

Kevin Pendley | May 15, 2008 8:47am EDT | Comment

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Small-cap stocks are expected to open higher Thursday in line with overnight gains in equity index products. The Russell 2000 (NYSE:IWM) was up about 0.2% heading toward the opening, which would translate to about 737.50. Gains in large-cap indices pulled slightly off the overnight highs after manufacturing and jobs data this morning came in soft.

The NY Manufacturing Survey was reported about minus 3.23 for May, which was below the consensus of 0.00, while the Weekly Claims report rose to 371,000 for the latest week, just slightly above the forecast of 370,000.

The data spree continues this morning, with the release of Industrial Production numbers at 9:15 a.m. ET, and the Philly Fed survey at 10:00 a.m. ET. In addition, Federal Reserve Chairman Ben Bernanke is slated to talk about “risk management” at 9:30 a.m. ET.

If the market can open higher this morning, it will be a more important show of support than normal, just to help alleviate jitters stirred by Wednessday’s sharp slide off fresh five-month highs. The Russell 2000 formed a bearish pattern on daily charts Wednesday, but that formation will lose power if small caps can generate gains throughout today’s action.

Big caps of note driving overnight action included JC Penney (NYSE:JCP), which was up about 3% after quarterly earnings came in better than the Street forecast. Also, Yahoo! Inc. (Nasdaq:YHOO) rose about 3% in after-hours action on talk that Carl Icahn would try to force the board to sell the company to Microsoft. Icahn has been accumulating a big stake in Yahoo of late and could be in position to drive the board slate there.

Crude oil prices moved higher overnight, which was a limiting upside factor for stocks. The dollar was soft against the euro last night after solid economic data from Europe, but the greenback recaptured most of those losses ahead of the U.S. open.