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Premarket: Thursday's rally stopped in its tracks Add to ...

Thursday's exuberant rally that saw the S&P 500 rise by the most in five months isn't showing much sign of carrying into today. U.S. stock futures are mildly lower and European markets are flat. The Nikkei overnight rose nearly 2 per cent, a relatively tepid recovery after the 6.3 per cent plunge the day before.

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Some stronger-than-expected U.S. jobless claims and retail sales data helped buoy spirits on Thursday, but the rally really got underway after the Wall Street Journal published a story by a staffer - recognized as having deep contacts with the Federal Reserve - suggesting that the central bank will offer soothing words about the direction of monetary policy. The story said the Fed would likely reiterate next week as it announces its latest interest rate decision that it expects a "considerable" amount of time to pass between ending the central bank's bond-buying program and raising short-term rates.

The article, however, appeared to refer more to the Fed's commitment to keeping interest rates low, rather than maintaining its bond-buying program intact for a prolonged period - so market players are reassessing the knee-jerk reaction from Thursday. Much of the dip in global equity values in recent weeks was spurred by concern that the Fed would soon start tapering its quantitative easing measures.

That said, at least so far today, a reversal of Thursday's rally isn't expected. And the TSX, which also enjoyed a triple-digit-point boost on Thursday, will find some support from modestly higher commodities prices this morning.

Long-term bond yields are backing off a bit from recent highs, though not by much. Bonds and equity futures largely held steady after a batch of U.S. and Canadian economic reports at 830 a.m. More U.S. data are being released later this morning. 

In overseas economic readings, annual inflation in the euro zone rose 1.4 percent in May compared with 1.2 percent in April - low enough to allow the European Central Bank enough breathing room to maintain and possibly expand stimulative measures.

Now, here's a closer look at what's going on this morning and what's to come.

MARKETS:

Equities:

Futures: S&P 500 -0.2 per cent; Dow -0.2 per cent; Nasdaq -0.2 per cent

Hong Kong's Hang Seng +0.39 per cent

Shanghai composite index +0.64 per cent

Japan's Nikkei +1.94 per cent

London’s FTSE 100 -0.15 per cent

Germany’s DAX +0.21 per cent

France's CAC 40 unchanged

Commodities:

WTI crude oil (Nymex July) +0.34 per cent at $97.02 (U.S.) a barrel

Gold (Comex Aug) +0.12 per cent at $1,379.40 (U.S.) an ounce

Copper (Comex July) +0.47 per cent at $3.20 (U.S.) a pound

Currencies:

Canadian dollar down 0.0018, or 0.18 per cent, at $0.9828 (U.S.)

Bonds:

U.S. 10-year Treasury yield 2.17 per cent, down 0.06

Canada 10-year government bond yield 2.14 per cent, down 0.07

ECONOMIC INDICATORS TO WATCH:

The U.S. producer price index for May was unchanged. Economists were looking for a 0.2 per cent rise.

Canada manufacturing shipments fell 2.4 per cent in April from March.

(915 a.m. ET) U.S. releases industrial production for May, forecast to rise 0.2 per cent from April. Manufacturing is forecast to rise 0.3 per cent and capacity utilization is expected to rise slightly to 77.9 per cent.

(955 a.m. ET) Reuter's/University of Michigan consumer sentiment index released for May. Economists forecast the index to hold steady at 84.5.

STOCKS TO WATCH:

Groupon shares are up 5 per cent in the premarket after Deutsche Bank upgraded the stock to "buy" from "hold."

Smith & Wesson Holding Corp. shares are up 5 per cent in the premarket after reporting preliminary quarterly earnings of 44 cents per share, beating Street estimates of 40 cents.

Research In Motion shares are up 1.2 per cent in the premarket, suggesting the stock will extend gains after its 6 per cent rally on Thursday after an analyst upgrade.

THIS MORNING'S TOP INVESTING READS ON THE WEB:

Wall Street’s biggest bond dealers are telling clients to shift from most fixed-income markets into U.S. stocks as deepening concern the Federal Reserve will pare unprecedented stimulus fuels the worst debt losses since 2011.

What to worry about - and where - if you have money invested in tumbling stocks of emerging markets.

How ordinary investors get taken by Wall Street pros.

Four reasons why Apple may be in more trouble than you think.

How the carry trade has been hurting your portfolio this week.

The Canadian Couch Potato blog on why it's time to ban adviser commissions.

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The premarket report is constantly updated to reflect the latest news developments and market moves. For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities.

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