Lower open on tap as techs limping, Europe weakness
Small-cap stocks are expected to open solidly lower, pulled down by slumping technology shares and a decline in European equities. The ADP Employment Survey painted a bleak picture of the jobs situation in the United States, which could add caution into the mix ahead of Friday’s big employment report. Stock index futures were off about 2.2% in pre-market trading, which suggests the Russell 2000 (NYSE:IWM) will open near 433.
The productivity report came in better than expected at 1.3% (the forecast was 0.9%), but the market appeared to look past that data in favor of the more somber ADP survey, which makes sense ahead of Friday’s report. The ADP headline figure suggested the nation lost 250,000 payroll jobs in November, which was below the forecast for a decline of 200,000. Earlier this morning, the weekly MBA Mortgage Applications Survey jumped 11% in response to a plunge in mortgage rates last week, which provides some hope that the economy might be showing some life.
Tech stocks were clearly the focal point this morning, with Nasdaq futures pacing overnight declines and the European stock market pulled down after dreadful results from Infineon, the second-largest semiconductor manufacturer. On the U.S. side of things, a positive reaction to Marvell Technology Group Ltd. (Nasdaq:MRVL) earnings in extended trade Tuesday was swamped overnight by negative preliminary results from Research in Motion Ltd. (Nasdaq:RIMM).
Looking at the chart picture, Tuesday’s big recovery move helped stem the collapse off Monday’s historic decline, but the market remains in a long-term bear market and still lacks any dynamic signs of a bottom. Look for support today around 424.50, then at 413.50. If the market can mount a bounce off the lower opening, then resistance is at 452.50 and then at 464.
The productivity report came in better than expected at 1.3% (the forecast was 0.9%), but the market appeared to look past that data in favor of the more somber ADP survey, which makes sense ahead of Friday’s report. The ADP headline figure suggested the nation lost 250,000 payroll jobs in November, which was below the forecast for a decline of 200,000. Earlier this morning, the weekly MBA Mortgage Applications Survey jumped 11% in response to a plunge in mortgage rates last week, which provides some hope that the economy might be showing some life.
Tech stocks were clearly the focal point this morning, with Nasdaq futures pacing overnight declines and the European stock market pulled down after dreadful results from Infineon, the second-largest semiconductor manufacturer. On the U.S. side of things, a positive reaction to Marvell Technology Group Ltd. (Nasdaq:MRVL) earnings in extended trade Tuesday was swamped overnight by negative preliminary results from Research in Motion Ltd. (Nasdaq:RIMM).
Looking at the chart picture, Tuesday’s big recovery move helped stem the collapse off Monday’s historic decline, but the market remains in a long-term bear market and still lacks any dynamic signs of a bottom. Look for support today around 424.50, then at 413.50. If the market can mount a bounce off the lower opening, then resistance is at 452.50 and then at 464.
About the Author
Kevin Pendley covers the Russell 2000 index for SmallCapInvestor.com and writes a weekly technical analysis column.
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