(Updated with the latest economic and corporate news, and market data)
North American stock markets may make a run at recovering some lost ground this morning after sinking to fresh multi-month lows on Wednesday. But it's going to be a tough battle for bulls to take back control.
U.S. stock index futures early this morning were mildly higher, but have retreated to negative territory as the U.S. reported initial jobless claims unexpectedly spiked by 78,000 last week. Much of that was blamed on the effects of Hurricane Sandy.
From a technical perspective, markets appear oversold. The 14-day relative-strength index for the S&P 500, for instance, fell to 27.7 on Wednesday. That's the first time since June that the gauge of market momentum slid below 30. The move comes after major U.S. indexes broke below their 200-day moving averages in recent sessions.
The main blame has been tied to worries that the U.S. is heading towards the fiscal cliff of tax increases and spending cuts at the end of this year, since a divided Congress may not be able to apply the brakes on time. President Barack Obama on Wednesday was both tough-minded and conciliatory at a White House press conference, saying he is open to discussing most ideas but none that would prevent the richest Americans from paying higher taxes.
There are growing feelings, however, that the 5.1 per cent fall in the S&P 500 since Mr. Obama's re-election is at least already partly pricing in a failure to prevent the fiscal cliff. That suggests stocks could be heading for a rally if Washington can move beyond the gridlock that has been the bane of its recent existence.
Still, risks for equity players extend well beyond U.S. politics. Market players are a bit rattled by the news out of the Middle East, where there was an Israeli air strike on Gaza Wednesday. Overnight, more signs emerged of the dire situation in situation in Europe, as the euro zone slipped into its second recession since 2009 and retail sales in Britain posted a surprise fall in October.
There's plenty of U.S. and Canadian economic news for markets to absorb this morning as well. We detail that and more in our roundup below.
Futures: Dow -0.03 per cent, S&P 500 -0.2 per cent, Nasdaq 0.0 per cent
Hong Kong's Hang Seng index -1.55 per cent
Shanghai composite index -1.24 per cent
Japan’s Nikkei +1.91 per cent
London’s FTSE 100 -0.42 per cent
Germany’s DAX -0.89 per cent
France's CAC 40 -0.41 per cent
WTI (Nymex Dec) -0.15 per cent at $86.19 (U.S.) a barrel
Gold (Comex Dec) -0.50 per cent at $1,721.50 (U.S.) an ounce
Copper (Comex Dec) +0.26 per cent at $3.47 (U.S.) a pound
Canadian dollar up 0.0012, or 0.12 per cent, at 0.9975 (U.S.)
STOCKS AND ECONOMIC INDICATORS TO WATCH:
Statistics Canada said manufacturing sales in September rose 0.4 per cent, but they were down 0.7 per cent when the aerospace sector is removed.
The U.S. Commerce Department said the consumer price index in October rose 0.1 per cent from September, as economists expected.
U.S. jobless claims last week surged 78,000 to 439,000. That's much higher than the 376,000 that economists had forecast, but much of the rise was blamed on Hurricane Sandy.
(Later this morning) The Canadian Real Estate Association is expected to report on existing home sales in October. Economists expect unit sales to be 2 per cent below year-earlier levels, and prices to remain unchanged. Canada’s Multiple Listing Services also expected to release its home price index for October. Economists expect an annual increase of 3.5 per cent.
(1000 a.m. ET) U.S. Philadelphia Fed Survey for November is released. Economists expect a reading of 4.5, a drop from the previous month's 5.7, although the range from analysts vary widely.
Wal-Mart reported third-quarter earnings per share of $1.08, close to expectations, although revenues were a tad light of what analysts predicted. Shares are down 3.3 per cent in the premarket.
Target Corp. said fiscal third-quarter earnings rose 15 per cent as the retailer’s revenue increased slightly more than expected. It also forecast fourth-quarter adjusted earnings of $1.64 to $1.74 a share, better than the $1.51 a share expected by analysts. Shares are up 0.8 per cent in the premarket.
Viacom said net income grew 13 percent in the most recent quarter even as revenue fell more than Wall Street expected with the lack of a strong theatrical release.
Other earnings include Applied Materials Inc.; Canadian Satellite Radio Holdings Inc.; Dell Inc.; FP Newspapers Inc.; Gap Inc.; Sears Holdings Corp.; Sprott Resource Corp.; and Tembec Inc.
BP has agreed to pay a criminal penalty in the billions of dollars for the 2010 oil spill in the Gulf of Mexico, AP is quoting sources as saying. Shares are up 1.5 per cent in the premarket.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
The stock market’s 200-day moving average has now been decisively broken. But how good a track record does this trend-following indicator really have? Mark Hulbert takes a historical look.
Analysts' top picks for energy stocks right now.
The recent market selloff has occurred against a backdrop of seemingly fine economic news. For the reason why, look to the decline in corporate profits and analysts' expectations for that trend to continue.
America's largest banks are still stingy with handing out credit. Luckily for those with less-than-stellar credit ratings, they can go to Costco to pick up a home mortgage along with that package of toilet paper.
Japan is bracing for huge change in its political and monetary leadership in the next few months.
For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities