EQUITIES END MIXED AS $775 BILLION STIMULUS PLAN CREATES CAUTIOUS, SELECTIVE POSITIVE SENTIMENT.
US equity futures ended the session mixed to slightly positive as details regarding the form of the proposed US $775 billion stimulus package continue to offer equity traders & investors feeling of cautious optimism. Technology & construction stocks were among the highest sector gainers on continued belief that the format of the stimulus package, particularly its focus on infrastructure development and small business tax cuts, will have extended benefits for these sectors. Walt Disney Co., Hewlett-Packard Co. rose more than 3.4 percent on expectations consumer spending will be bolstered by Obama's plan for tax breaks worth $500 to individuals. Ciena Corp advanced 19 percent, the most since 2004, and led a rally in technology shares after Barclays Plc upgraded the maker of network equipment on growth prospects.
Gains in equity futures appeared to lag behind cash indices, possibly signaling that a significant percentage of the market's recent upward momentum is the result of new & sidelined capital being put to work for the purpose of seeking out more balanced rates of return. Using the lack of carry through momentum from futures as a indicator, traders & investors may be speculating that the upward momentum in these markets is destined to encounter strong head winds of resistance as the ongoing elements of the recession unfold for the new administration. They are likely to have a limited pass with regards to how long positive momentum could remain intact.
Technically, Dow futures have continued to post a series of higher highs. Tuesdays close places the market near a key resistance level of 9000. Failure to breech and hold above 9100 should result in a pullback to the 8650 level, with next target level down at 8490.
March Dow futures settled at 8950, up 32. March S&P futures settled at 930.50, up 310 (.33%). NASDAQ futures settled at 1271.00, up 600 (.47%)