Wall Street set to stall at open after big run
Stock index futures indicated little change at the open on Monday after equities posted their best week in a month as the euro zone debt crisis and the U.S. economy showed signs of stabilizing.
Euro zone finance ministers will decide Monday what terms of a Greek debt restructuring they are ready to accept for a second bailout package after private creditors said they could not improve their offer to potentially take a real loss of 65 percent to 70 percent on their Greek bonds.
U.S. stocks are up nearly 5 percent this year after a four-day rally last year, with investors particularly emboldened by a turnaround in U.S. banking stocks that have helped lead the rally after an abysmal 2011.
A solid showing in fourth-quarter earnings during the current reporting season has also put a floor in the market.
If earnings come in decently I don't see any type of a big plunge, said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. But he added: I'm still concerned about when we get towards the end of earnings season.
S&P 500 futures added 0.2 point and were just below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures were up 13 points, and Nasdaq 100 futures added 1.75 points.
The S&P 500 is up over 22 percent from October lows. The Nasdaq 100 <.NDX> is at its highest level since 2001.
{The market) has had a positive tone since the year began. The turn in the financial stocks has provided a good underpinning for the market, said Rick Meckler, president of investment firm LibertyView Capital Management in New York.
What you're really starting to see is a decrease in volatility and a market where individual stock earnings are staring to become more important and the correlation is starting to decrease for all stocks.
Halliburton Co
Research In Motion Ltd's
Among other companies due to report, Texas Instruments Inc
The fourth-quarter earnings season has not been as good as previous ones. Of about 70 companies in the S&P 500 that have reported earnings so far, 60 percent exceeded estimates, according to Thomson Reuters data.
Given the recent outperformance of economically sensitive stocks compared to interest rates, Goldman Sachs recommended shorting U.S. 10-year Treasury bonds in anticipation that improved economic performance will push yields higher.
Yields have traded in a tight range around an average 2 percent since September, including so far into 2012, said Goldman in a research note. We are now of the view that a break to the upside, to 2.25-2.50 percent, is likely and recommend going tactically short.
Chesapeake Energy Corp
(Reporting By Edward Krudy editing by Jeffrey Benkoe)
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