Futures Slightly Higher Despite China Rate Hike

9:00am (EST)

There bulls had another outstanding day as they drove the market to fresh highs not seen since June 2008. There was a mixture of M&A news which we covered yesterday and earnings were better-than-expected for the most part on Monday which provided the momentum for a higher close.

The Dow made a steady advance until the afternoon and spent much of the second half drifting sideways at higher prices. The end result was another new high as the index added nearly 70 points, or 0.6%, to finish at 12,161. Our near-term target is Dow 12,300-12,350 and we are expecting to trade up into this range this week.

The S&P 500 added 8 points, or 0.6%, and closed at 1,319. Our near-term target is 1,325 and the index traded up to 1,322.85 yesterday. We said there was a chance for a rally up to 1,350 before a pullback (which we are expecting next week) and it appears this could be our target if 1,325 is taken out.

The Nasdaq advanced 15 points, or 0.5%, and ended at 2,783. The index made a run up to 2,800 and hit a high of 2,796.50 before giving back a little. We said Tech could run to 2,850 over the near-term and all signs are pointing towards a test of 3,000 down the road.

There isn’t much on the docket as far as economic news today but we were encouraged by a report that came out after our 1pm update yesterday. The December consumer credit report showed an increase of $6.1 billion, which was far more than the $2.5 billion increase that had been expected. Overall, consumer borrowing was up 3% in December, as credit cards rose 3.5%, the first rise since August 2008, while borrowing on auto loans increased 2.8%

Futures are slightly higher this morning despite the fact China’s central bank raised interest rates for the second time in just over a month. Some suit-and-ties are worried about the impact tightening will have on Chinese growth but we don’t see it as a big deal because China has been implementing a gradual tightening process over the last few months and we don’t think it will have a material impact just yet.

Dow futures are higher by 10 points while the S&P 500 and Nasdaq 100 futures are up less than a point.

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Futures Slightly Higher Despite China Rate Hike

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