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Premarket: The Bernanke bounce isn't over Add to ...

The market euphoria ignited by Ben Bernanke's sweeping measures to get the U.S. economy into a higher gear is extending into today. The S&P 500 is set to strike fresh five-year highs after overseas markets rallied overnight. West Texas Intermediate oil rose overnight to $100 (U.S.) a barrel for the first time in four months. And the Canadian dollar is now approaching four cents above parity.

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Indeed, the bulls are in firm control this morning after the Federal Reserve extended its window for lower interest rates and established a new program to buy $40-billion of mortgage-back bonds each month until the economy improves. While some of the Fed's action was anticipated, many market participants were surprised by the open-ended nature of the move. Unlike previous rounds of quantitative easing, Mr. Bernanke didn't set a limit on how much the Fed would spend. Whether the actions will be successful, of course, remains to be seen.

Markets were already celebrating earlier this week after a German court cleared the way for Europe's own stimulus measures. The Fed actions have buoyed sentiment even further in the euro zone. The yield on 10-year Italian bonds overnight fell as much as six basis points to 4.95 per cent, the first time it has slipped below 5 per cent since March 26.

Crude is hovering near $100 this morning. A stronger U.S. economy points to better demand for the commodity, but traders are also concerned about the unrest in the Middle East and North Africa disrupting supplies.

Gold is little changed after Thursday's big rally, stoked by fears inflation could make a return due to the Fed actions, and copper is continuing a sharp rally.

It adds up to what will likely be some decent gains as trading in the TSX gets underway.

A raft of economic data were released at 0830 a.m., including U.S. inflation and retail sales. The U.S. figures weren't far off expectations and U.S. stock futures, while slipping slightly, are still firm. The Canadian dollar came off its highs from overnight as Statistics Canada released weaker-than-expected manufacturing sales and the U.S. data hit.

Here's the rundown of what else you need to know as the investing day gets underway.

MARKETS:

Equities:
Futures: Dow +0.3 per cent, S&P 500 +0.3 per cent, Nasdaq +0.3 per cent

Hong Kong's Hang Seng index +2.90 per cent

Shanghai Shenzhen CSI 300 +0.65 per cent

Japan’s Nikkei +1.82 per cent

London’s FTSE 100 +1.51 per cent

France’s CAC 40 +1.97 per cent

Germany’s DAX index +1.50 per cent

Commodities:
WTI (Nymex Oct) +1.17 per cent at $99.46 (U.S.) a barrel

Gold (Comex Dec) -0.06 per cent at $1,771.10 (U.S.) an ounce

Copper (Comex Dec) +3.18 per cent at $3.83 (U.S.) a pound

Currencies:
Canadian dollar up 0.0011, or 0.08 per cent, at 1.0330 (U.S.)

STOCKS AND ECONOMIC INDICATORS TO WATCH:

Apple Inc. appeared to have sold out of its initial inventory of the iPhone 5 just an hour after it began accepting pre-orders Friday, suggesting strong consumer interest in the new device. Shares are up 0.7 per cent in the premarket.   

Unitedhealth Group is replacing Kraft in the Dow 30. Kraft is down 0.5 per cent in the premarket; Unitedhealth Group is up 2.5 per cent.

Statistics Canada reported on manufacturing sales in July. They fell by 1.5 per cent, nearly double forecasts.

The U.S. Commerce Department reported on the consumer price index in August, coming in as expected at plus 0.6 per cent. It was the highest in three years.

The U.S. Commerce Department reported on retail sales in August. They rose 0.9 per cent on higher gasoline prices and auto sales, a little higher than the 0.7 per cent that was expected.

(0915 a.m. ET) The U.S. Federal Reserve Board reports on industrial production and capacity utilization in July. Economists expect production to be flat, and capacity utilization at 79.3 per cent.                         

THIS MORNING'S TOP READS ON THE WEB:

The world's most powerful hedge fund manager tells investors how they should set up their portfolios.

Why Apple did not announce a subscription music service this week.

Billionaire Wilbur Ross said private-equity investors are increasingly interested in shipping after a four-year rout caused by a glut of capacity.

Wall Street underwriters increasingly are allowing corporate insiders to sidestep agreements that prevent them from quickly selling shares after initial public offerings.

What you need to know about defined maturity bonds funds, and when they make ideal investments.

Donald Trump says the Federal Reserve's move to keep interest rates low and provide additional stimulus “will not ultimately benefit the economy.” But he's benefiting from the resulting stock rally and reveals stocks he's purchased in the past two years.

How to search for profits in stocks experiencing a corporate scandal.

Follow on Twitter: @eyeonequities

 

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