Skip to main content
inside the market

The Before the Bell report is constantly updated to reflect the latest news developments and market moves in the premarket. Check back later for updates.

Stocks are rallying sharply this morning after investors got a jolt of unexpected news Sunday that former Treasury Secretary Lawrence Summers has dropped out of the running for Federal Reserve chairman.

Mr. Summers was widely seen as the Fed candidate who would be less friendly to the idea of keeping aggressive stimulus measures in place. His withdrawal now makes Fed vice chairwoman Janet Yellen as the clear front-runner. Perceptions that she would favour a slower pace of tapering of Federal Reserve monthly bond purchases have markets on the move, with U.S. stock futures up more than 1 per cent this morning and the U.S. 10-Year Treasury yield dropping to 2.81 per cent - suggesting that income-producing securities such as utilities and real estate investment trusts should do well as the TSX opens.

The U.S. dollar is weaker against major currencies, as Mr. Summers was also seen as more likely to raise interest rates faster than other contenders for the Fed position. With the greenback weakening, gold is moving up this morning.

But crude oil prices are down more than 1 per cent, as geopolitical concerns over Syria and possible disruptions to the region's oil supplies continue to abate. The U.S. agreed this weekend on a nine-month United Nations program to destroy the country's chemical arsenal, making any near-term military action against Syria unlikely.

We'll soon find out if the scaling back of the so-called quantitative easing measures is about to begin. The Federal Open Market Committee will conclude a two-day policy meeting on Wednesday. Market watchers are still not unanimous in their view on whether the tapering of the $85-billion (U.S.) in monthly bond purchases will be announced. Although the consensus view is that the Fed will scale back the program by $15-billion a month this week, there are some that believe the central bank will hold off until later this year.

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

MARKETS:

Equities:

Futures: S&P 500 +1.1 per cent; Dow +1.1 per cent; Nasdaq +1.1 per cent; S&P Toronto +0.6 per cent

Hong Kong's Hang Seng +1.47 per cent

Shanghai composite index -0.23 per cent

Japan's Nikkei +0.12 per cent

London's FTSE 100 +0.84 per cent

Germany's DAX +1.21 per cent

France's CAC 40 +0.84 per cent

Commodities:

WTI crude oil (Nymex Nov) -1.28 per cent at $106.86 (U.S.) a barrel

Gold (Comex Dec) +0.40 per cent at $1,313.80 (U.S.) an ounce

Copper (Comex Dec) +0.28 per cent at $3.21 (U.S.) a pound

Currencies:

Canadian dollar at 97.11 (U.S.), up 0.0025 from Friday's North American close.

U.S. dollar index down 0.27 at 81.18

Bonds:

U.S. 10-year Treasury yield 2.81 per cent, down 0.07

ECONOMIC INDICATORS TO WATCH:

Canadian home sales climbed 11.1 per cent in August from year earlier, 2.8 per cent from July. The MLS Home Price Index rose 2.9 per cent year-over-year in August.

Canada released international securities transactions for July. It showed foreign investors purchasing $6.09-billion of Canadian securities in the month, with Canadians purchasing $947-million of foreign securities.

U.S. reported the Empire State Manufacturing index fell to 6.29 in September from 8.24 in August. Economists had expected 9.1.

U.S. industrial production rose 0.4 per cent in August versus the 0.5 per cent Street estimate.

STOCKS TO WATCH:

BlackBerry Ltd. shares are up 0.6 per cent in the U.S. premarket after Reuters reported that "initial indications" suggest corporate interest in buying the smartphone maker is modest and that possible bidders are looking at just parts of the company.

Aimia Inc. struck a deal with Toronto-Dominion Bank and Canadian Imperial Bank of Commerce under which TD will be the issuer of Aeroplan credit cards and acquire half of CIBC's existing portfolio, with CIBC retaining the rest.

Packaging Corp. of America is buying Boise Inc. for about $1.27-billion to increase its container board capacity. Boise shares are up 25 per cent in the premarket.

Wi-Lan Inc. said it entered a patent licensing agreement and settled all pending patent litigation with Alcatel-Lucent.

Bombardier set to fly the first test flight of its C Series commercial aircraft today.

ANALYST ACTIONS

CIBC cut its target on Reitmans (Canada) Ltd. to $8 from $10 and reiterated a "sector performer" rating.

BMO Nesbitt Burns hiked its price target on Methanex Corp. to $57.50 (U.S.) from $51 and reiterated an "outperform" rating.

Sterne Agee raised its price target on Boeing to $164 from $120 and reiterated a "buy" rating.

Macquarie upgraded Domtar Inc. to "neutral" from "underperform."

Canaccord Genuity raised his price target on Sirius XM Canada Holdings Inc. to $9.40 from $8.20 and maintained a "buy" rating.

JPMorgan upgraded Bristol-Myers Squibb Co. to "overweight" from "neutral" and raised its price target to $52 from $50.

FirstEnergy Capital upgraded Imperial Oil Ltd. to "outperform" from "market perform."

THIS MORNING'S TOP INVESTING READS ON THE WEB:

History suggests you don't have to run for the hills now that higher interest rates appear on the horizon.

The largest developing nations for the first time have the worst market opportunities as optimism for stronger growth shifts to the U.S. and Europe, according to a Bloomberg Global Poll.

Noted market historian Laszlo thinks the S&P 500 is headed to 2,000.

Thinking about investing in the Twitter IPO? Here's why you shouldn't.

What Twitter is trading at in the secondary market.

Twitter may have a growth problem.

Five-year fund returns are about to more than double.

-----

For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe