By Barbara Kollmeyer, MarketWatch Grantham: Another 10% run and
then S&P will crash
MADRID (MarketWatch) -- Stock futures dipped early Tuesday ahead
of producer prices and housing data, with investors weighing up
news of a snap election in Japan and better-than-expected data from
Germany.
Futures for the S&P 500 index (SPZ4)(SPZ4) eased 3.7 points
to 2,036, while the Dow industrials (DJZ4) fell 16 points to
17,601. Futures for the Nasdaq-100 index (NDZ4) dipped 8.75 points
to 4,203.25.
A report on U.S. producer prices for October is due at 8:30 a.m.
Eastern Time, and a home builders' index for November is coming at
10 a.m. Eastern.
But global events were in the spotlight Tuesday. As expected,
Japanese Prime Minister Shinzo Abe announced plans to call a snap
election and to delay a planned sales-tax hike by 18 months, after
data showed Monday the country fell into a recession.
Out of Europe came a survey from ZEW showing improved German
sentiment on the economy -- a sign the country's fortunes may be
turning around, the ZEW institute said.
Running out of steam: The S&P 500 (SPX) nabbed a record
close on Monday, but closed up just 0.07%, dented by soft U.S. data
and the downbeat news on Japan's economy. The S&P 500 has now
logged five-straight sessions without a daily price change of more
than 0.1%, which has some suggesting the rally may be slowly losing
steam.
The U.S. stock market remains on course to "run deep into bubble
territory" before crashing, wrote Jeremy Grantham, co-founder and
chief investment strategist of Grantham Mayo van Otterloo, in a
quarterly newsletter released Monday. He said bubble territory
starts at 2,250 on the S&P 500, roughly another 10% gain from
here. (Also see: A turning point for the S&P?
http://www.marketwatch.com/story/decision-making-time-for-the-sp-2014-11-17.)
Billionaire investor Carl Icahn told a Reuters conference on
Monday that he's also worried about a market selloff, though not
for the next three to five years. (Read more in Need to Know
http://www.marketwatch.com/story/bone-chilling-temps-put-the-us-and-the-stock-market-in-a-deep-freeze-2014-11-18.)
Mislav Matejka, strategist at J.P. Morgan Cazenove, said in a
note dated Monday it has switched to overweight on the eurozone and
cut U.S. equity exposure to underweight. Among the reasons: The
eurozone has underperformed sharply, and valuations are improving
versus the U.S.
Stocks to watch: Home Depot Inc. (HD)(HD)(HD) reaffirmed
fiscal-year 2014 guidance and announced earnings per share of $1.15
in the third quarter. Manchester United Ltd. (MANU) and Dick's
Sporting Goods Inc. (DKS) are also expected to report earnings
ahead of Wall Street's open.
Urban Outfitters Inc. (URBN) reported a drop in third-quarter
earnings on Monday, which weighed on shares in late trading.
Gold jumps as dollar falls: The news from Japan's Abe weighed on
the dollar (USDJPY) versus the yen, which sent gold (GCZ4) prices
higher by about 1.6%.The Nikkei 225 index rebounded 2.2% ahead of
the announcements from Japan's Prime Minister.
European stocks and the euro (EURUSD) rose after ZEW report. Oil
prices (CLZ4) were higher.
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