News Column

Futures Rise Ahead of US Economic Data

June 26, 2012

Matt Wickenheiser

Wall Street

Stock futures rebounded as investors again focus on domestic economic issues rather than Europe, where the debt crisis is creating new burdens for countries like Spain.

Dow Jones industrial average futures rose 18 points to 12,449. Standard & Poor's 500 futures tacked on 1.9 points to 1,308.50 and Nasdaq futures added 5.25 points to 2,531.75.

On Tuesday, Standard & Poor's/Case-Shiller issues its 20-city index of changes in home prices from March to April. From February to March, prices rose in most major cities for the first time in seven months. Since then, the supply of homes for sale has fallen, which could help boost prices further this year.

KeyBanc Capital Markets analyst Kenneth Zener said that there are clear signs of tightening demand, even though there are also unlisted "shadow" inventories that could still come on the market.

"We think falling level of inventory, especially non-distressed units, is a good backdrop for sustained higher builder orders rates, as buyers capable of buying homes are driven to the limited supply of new or non-distressed homes," Zener wrote.

Homebuilder shares edged higher in premarket trading.

In contrast, the hangover from a real estate bust in Spain is threatening the health of the economy inside, and potentially outside of its borders.

A day after Spanish 28 banks were downgraded by Moody's, the nation's borrowing costs spiked in a pair of short-term auctions, signaling a growing hesitance to lend the country money.

While demand was strong, the interest rate on 3-month bills was 2.36 percent Tuesday, nearly triple the 0.85 percent paid in the last such auction on May 22.

Spanish banks need money to continue operations, but markets are searching for some catalyst that would change the country's outlook. They are finding little to grasp.

The European Council published a plan Tuesday that would ask members of the 17-nation euro grant power to a supranational authority to demand changes in national budgets.

It is hoped that heading off budget problems early in problem countries such as Greece would save the euro and bind the union tighter.

Later Tuesday, The Conference Board, private U.S. research group, reports its monthly consumer confidence index.

Economists expect the board to report that the index fell to 63.2 in June from 64.9 in May.

The index is well below a reading of 90, which would indicate a healthy economy. The index hasn't touched that level since the recession that began in December 2007. It is, however, moving in a positive direction since striking an all-time low of 25.3 in February 2009.



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