U.S. stocks appear set to extend their record-breaking run this morning, but their gains once again may leave Canada's TSX in the dust, after another dip in the value of major commodities this morning.
The S&P 500 closed at its highest level ever on Tuesday - while also hitting a record intraday high - as the firming U.S. economy, and the belief that stock market valuations are still reasonable, keep investors fairly confident that the rally can continue.
Even with a more than 10 per cent gain in the S&P 500 this year, many strategists aren't overly concerned. Famed investor Jim O'Shaughnessy, for instance, told Inside the Market Tuesday in a live discussion that from a very long haul perspective, history suggests the stock rally is still in its young days.
When looking at history's 50 worst 10-year periods, they are never followed by negative returns in the three, five or 10 years that follow them, he pointed out. February of 2009 was the second-worst 10-year return for stocks since 1871, and as we are now only in the fourth year of a 10-year period following that big downturn, he believes there's a good bull case right now.
Still, others looking beneath the surface of Tuesday's record highs found things to worry about. They note that the Dow Jones Transportation Average actually fell 1.2 per cent, its second straight day of losses. Similarly, small-cap stocks struggled on Tuesday. Both these sectors can be leading indicators for the broader market.
Futures are only mildly higher this morning, so the rally is looking a bit tentative today. And the bull run may face another challenge in coming days as the U.S. corporate earnings season gets underway, starting with Alcoa Inc.'s first quarter numbers next week. According to analyst estimates compiled by Bloomberg, profits at S&P 500 companies are forecast to drop 1.9 per cent for the period - their first retreat since 2009 and marking quite a reversal from the 8 per cent rise in profits seen in the fourth quarter.
Given that strong earnings growth has been one of the drivers of the bull run, it could act as a trigger for a pullback should the forecasts pan out.
Of note overnight was a nearly 3 per cent jump in Japanese stocks. That rally was underpinned by a jump in automakers after strong U.S. March sales were reported on Tuesday.
Now, here's a closer look at what else is going on this morning and what's to come.
U.S. futures: S&P 500 +0.1 per cent; Dow +0.1 per cent; Nasdaq +0.1 per cent
Hong Kong's Hang Seng index -0.14 per cent
Shanghai composite index -0.12 per cent
Japan's Nikkei +2.99 per cent
London's FTSE 100 -0.38 per cent
Germany's DAX -0.10 per cent
France's CAC 40 -0.19 per cent
Italy's FTSE MIB -0.64 per cent
WTI (Nymex May) -0.50 per cent at $96.69 (U.S.) a barrel
Gold (Comex Jun) -0.38 per cent at $1,569.90 (U.S.) an ounce
Copper (Comex May) -0.62 per cent at $3.36 (U.S.) a pound
Canadian dollar up 0.0006, or 0.06 per cent, at $0.9863 (U.S.)
ECONOMIC INDICATORS TO WATCH:
The U.S. ADP private payroll employment report for March showed 158,000 job gains, declining from 198,000 last month and missing analysts' expectations for 205,000 new jobs.
(10 a.m. ET) The U.S. Institute for Supply Management issues its non-manufacturing index for March. Economists expect a reading of 56.
STOCKS TO WATCH:
Toronto-Dominion Bank will be in focus after Ed Clark announced he is stepping down after 12 years as CEO. He will be replaced by Bharat Masrani, who runs the bank's personal and commercial banking operations. Shares are up 0.05 per cent in the premarket.
Zynga Inc. shares in the premarket were up 11 per cent after the company said it plans to introduce real-money online gambling in the U.K.
Global Payments Inc. shares should be under pressure after it reported lower-than-expected revenues.
Apple shares are up 0.4 per cent in the premarket after the Wall Street Journal reported late Tuesday that the company will begin production of a new iPhone in the current quarter.
Vodafone Group PLC ADS units are down 3.2 per cent in the premarket after Verizon Communications Inc. late Tuesday said it had no plans to make an offer for the U.K. telecom firm, although it could buy Vodafone's 45 per cent interest in Verizon Wireless.
ConAgra Foods reported adjusted earnings per share of 55 cents, just shy of the average analyst estimate of 56 cents.
Monsanto Co. raised its full-year profit forecast on Wednesday after reporting a better-than-expected second quarter driven by strength in its global corn business.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Hedge funds' pessimism on the Canadian dollar has reached a six-year high. But they are bullish on the greenback.
How the 2013 Canadian budget will affect ETFs, including the so-called advantaged products that aim to reduce tax burdens.
A look at some new Bank of Montreal ETFs.
Surprisingly, the defensive sectors of the market have led this year's rally.
Despite all the talk, there really wasn't a "great rotation" out of bonds and into equities in the first quarter.
Is Apple too big to succeed?
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