By Barbara Kollmeyer, MarketWatch
China cuts reserve-requirement for banks, sparking gold
gains
MADRID (MarketWatch) -- A cautious mood was settling in on
Wednesday, as stock futures moved lower along with oil prices, a
day after a monster rally sent the Dow industrials more than 300
points higher.
Investors are waiting on a private-sector payrolls survey and
data that will gauge the health of the U.S. services sector.
Earnings from Whirlpool Corp., General Motors Co. and Merck &
Co. Inc. will all hit the tape early.
Futures for the Dow Jones Industrial Average (DJH5) dipped 23
points to 17,549, while those for the S&P 500 index (SPH5)
slipped 4.8 points to 2,037.30. Futures for the Nasdaq-100 index
(NDH5) fell 9.75 points to 4,205.50. Losses pared some after the
People's Bank of China announced a cut in its reserve-ratio
requirement.
A rally for oil prices, and hence energy names, triggered the
biggest gain in more than three weeks for the Dow industrials
(DJI)(DJI) on Tuesday. The S&P 500 (SPX) jumped 1.4%, and the
Nasdaq Composite (RIXF) gained 1.1%.
But putting another day of big gains for stocks at risk was the
fact that oil prices were backing off Wednesday, with March WTI
crude (CLH5) dropping more than 3% and Brent crude down more than
2%. Losses came after data released late Tuesday showed a big
inventory build.
Investors are also watching for the ADP employment report for
January, ahead of Friday's nonfarm-payrolls report. That ADP data
is due at 8:15 a.m. Eastern Time, and then at 10 a.m. Eastern, the
ISM nonmanufacturing survey for January will be released.
A market battleground: Expect a "battle of the bulls and bears"
for Wednesday, said Michael O'Rourke, chief market strategist with
JonesTrading. He notes that so far in 2015, the S&P 500 has
been range-bound, with 1,980-1,990 as support and 2,050 -2,060 as
resistance.
Tuesday's close at 2,050 will have bulls "pushing for the
technical breakout" on Wednesday, despite the fact that positive
drivers are getting smaller and smaller on a daily basis, he said.
"With the growing list of negatives, we are continually amazed at
how many opportunities this market is giving investors to de-risk
within 2% of the all-time high," O'Rourke said in a note.
Stocks in the spotlight: Ahead of the bell, Whirlpool(WHR) is
expected to post fourth-quarter earnings of 41 cents a share,
according to a consensus survey by FactSet. General Motors (GM.XX)
is projected to report fourth-quarter earnings of 83 cents a
share.
Merck (MRK), Boston Scientific Corp. (BSX) and Clorox Co.(CLX)
are also expected to report ahead of the open.
Chipotle Mexican Grill Inc.(CMG) shares fell more than 5% in
late trade, after profit jumped but sales fell short of
expectations. Walt Disney Co.(DIS) saw shares rise in late trade
after earnings beat forecasts. Gilead Sciences Inc.(GILD) shares
fell late after it reported earnings that beat forecasts, but said
it expects price discounts for its hepatitis C drugs to double in
2015.
See more after-hours action in Movers & Shakers
China cuts reserve requirement for banks: The Nikkei 225 index
saw its biggest gain in two weeks on upbeat earnings. Well after
the close for Chinese stocks, which ended the day lower, the
People's Bank of China cut its reserve ratio for banks by 0.5%.
Among the reactions, gold prices (GCH5) moved higher.
The Stoxx Europe 600 index was largely flat after sizable gains
on Tuesday, led by a 11% surge for Greek stocks. The Athens
Composite Index was down 1.6% as Prime Minister Alexis Tsipras and
Finance Minister Yanis Varoufakis sought a debt deal with greater
leniency on repayments.
Read: European stocks mixed as Greece continues debt push
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