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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • INVESTORS LOOK AHEAD - By WSS Research Desk 0 comments
    Jul 8, 2013 4:43 PM

     

     

    By Carlos Guillen

    Equity markets are continuing to move higher after Friday's better than expected jobs report, and despite waking concerns of Fed tapering, it is apparent that investors have been enthused by a slowly improving employment backdrop. Today investors are looking ahead to the unofficial start of the second-quarter earnings reporting season, when Alcoa becomes the first Dow component to release results after the closing bell.

    Over in Europe, stock markets had an encouraging session, with the Stoxx Europe 600 up 1.4 percent, as political progress in Portugal helped calm investors. Portuguese Prime Minister Pedro Passos Coelho announced a cabinet reshuffle over the weekend and the governing coalition committed to staying united. Concurrently, Greece's international creditors said they would try to reach a last-minute agreement on terms of the next tranche of bailout funds.

    On the other hand, Asian markets did not fair too well today as China's Shanghai Composite was dragged down by 2.4 percent in response to worries that government policies would remain restrictive despite slowing growth.

    In all, despite the sustained gains so far into today's trading session, volumes have been on the light side, so things can turn at any instant. What is interesting to notice is that investors appear to be looking past Fed tapering; perhaps the notion that tapering is not such a bad thing is finally seeping into the minds of investors. Let's hope Alcoa does not dampen the spirits of Wall Street after they report later today.

    Small Caps Back in Business
    By David Urani

    And so the Dow continues to rebound, up more than 3% from the June low although still more than 1% below that May high. One index that just notched a new high, however, is the Russell 2000, the popular index of small-cap stocks which has made a nice breakout past the psychological 1,000 point level which represented the previous high. That's a good omen considering small cap stocks are often considered a leading indicator of blue chips. Thus, this could be an indicator of investor sentiment being high enough to take the Dow and S&P 500 back up to the highs as well.

    What's particularly interesting for me is the fact that small cap companies are more reliant on credit, and interest rates have been a focal point of late. Obviously, much of the market's weakness throughout June was related to the fear of Federal Reserve tightening which caused a subsequent spike in treasury yields (a benchmark for loan rates).

    Not only does the move in the Russell indicate a measure of confidence in the economy, but also perhaps some reassurance about Federal Reserve policy and the idea that if they are to pull back on quantitative easing there won't be a damaging impact on the credit markets, especially for smaller companies.

    (click to enlarge)

    https://www.wstreet.com/user/register.asp?source=3


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