Market Talk

Premarket US stock futures signal a sturdy snapback in the making after the Dow Industrials’ log their worst three-day stretch since last August.

The geopolitical problems that set stocks back this week haven’t exactly eased, mind you, but for some reason their importance has diminished this morning. A slight retreat in oil prices gets citations for the improved tone, though it’s wishful thinking to bet that crude has marked its near-term highs.

Second look at 4Q GDP due at 8:30 a.m. ET, expectations look for slightly higher revision, to 3.3%. Reuters/Univ of Michigan final February consumer sentiment index out at 9:55 a.m.

S&P futures up 8.70, DJ futures up 69. Ten-year lower, yield at 3.46%. Crude futures up a hair at $97.37/barrel.

US stock mostly weaker, but a midafternoon bounce take some of the pain away, even as the Libyan revolt continues.

DJIA drops 37 (0.3%) to 12069, S&P 500 eases 1 to 1306, but Nasdaq Comp rises 15 (0.6%) to 2738. After rising over $103/barrel, Nymex crude lately down around $96/barrel, and when crude changed direction, so did everything else. Still, it’s the Dow’s third consecutive losing session, and it’s the biggest three-day decline since August.

Indexes bounced back after the Dow crossed under the 12000 mark; crude also rebounded after some government reports that existing oil stockpiles could absorb the disruption in Libyan oil. Kind of an odd spark for a rally, since we already knew that.

Kind of a weird bounce, at that. Had the feel of one of those technical moves, and the fact that people are attributing it to the stockpiles thing seems odd. It was just stocks and oil, either. I’m looking at a report about Canadian bonds that’s talking about the reversal as well, and another about eurodollar futures. Whatever moved the market moved all the markets.

This is what our colleague Jerry DiColo wrote about oil’s move:

Crude futures retreated sharply from a fresh two-and-a-half year high Thursday, as U.S. and other officials said current oil stockpiles were adequate to meet any supply disruptions.

They’re talking, of course, about any Libyan disruptions. Still, it would’ve been news if the Saudis or the U.S. or anybody said they couldn’t handle any Libyan disruptions. So the move today very likely has more to do about some kind of market dynamic than any fundamental change in the picture.

Surging oil prices have stalled the US stock market’s months-long rally for two days now, and with crude futures parked above $100/barrel, early signs point to equities opening lower again.

Spike in oil continues to fuel concerns that the global economy (and our own delicate recovery in the US) is in for a setback. Weekly jobless claims, January durable goods orders both due at 8:30 a.m. ET; January new-home sales set for 10:00 a.m. Kansas City Fed February manufacturing survey at 11:00 a.m.

GM and Target report earnings results before the open; AIG reports after the close.

S&P futures down 7.20, DJ futures down 52. Ten-year note higher, yield at 3.43%.

We brought Newswires’ Tomi Kilgore onto today’s Markets Hub to break down the technical picture for the stock market. The upshot is that stocks are still strong technically — for now, right now.

Of course, if you’re watching the Tape here, that strength is ebbing steadily. Keep your eyes open.

Addendum: The S&P 500 broke under the 1300 mark, not long after crude oil broke over the $100/barrel mark (at least the much watched Nymex benchmark; the Brent benchmark has been over $100/barrel for a while.) Things are moving fast.

I’ll tell you, it takes this stock market about five minutes to rationalize away any risks. Futures were down sharply this morning, with Dow futures down about 130, as crude prices spiked as the protests in Libya have morphed into what looks like the beginning of a total uprising.

But you can almost see the stock-trader’s mind work its way through this thing, going from panic selling to panic buying; hey, losing Moammar Gadhafi can’t be a bad thing for business, right?

Here’s what John wrote at 7:30 a.m.:

For the first time in a while, US stocks on track for a sharp drop at the open, influenced by selloffs overseas as unrest continues to heat up in the Middle East and North Africa, and oil prices shoot higher. Markets went through a similar drill a few weeks ago when Egyptian protests hit a fever pitch, though you might recall anxiety was quickly curbed. Bulls have maneuvered around every potential roadblock in the past several months, no reason yet to think this time is different. S&P Case/Shiller December home price index due at 9:00am ET; Conference Board’s Feb consumer confidence gauge, Richmond Fed’s Feb business index both set for 10:00am. S&P futures down 16, Dow futures off 92. Ten-year note higher, yield at 3.52%.

Currently, Dow futures are down 73, S&P futures are down about 13.

It still appears like there’s going to be a stock sell-off, the market is overdue for one regardless, but don’t be surprised if this thing looks very different by the closing bell.

The issue for us folks in the U.S. is this: what kind of a spike in crude prices would it take to derail the recovery? How big a spike, and how prolonged? It was the spike in crude prices in the summer of 2008 that gave the economy the final push over the ledge. Once gas prices hit $4 at the pump, you could see the economy grind to a halt.

As Art Cashin at UBS likes to say, it was a waste of cab fare and a clean shirt.

Slow holiday trading in US stock markets turns out as expected — choppy, waffling range-bound session amid thin volume.

Major indexes spend some morning time following the euro before going their own way. Stocks rejoin a fading euro late in the session, slumping to lows for the day before bouncing one more time to finish roughly flat. Directionless, disinterested formulaic trading. Like staring at an EKG of a Maine potato (another well-known Cashinism).

Financials, industrials and materials lead sector decliners; energy, consumer discretionary gain. DJIA rises 3.63 to 11010.11, and Nasdaq Comp adds 0.42 to 2402.33. S&P 500 ends 0.11 lower at 1165.04.

Intel reports after tomorrow’s close. FOMC minutes due at 2:00pm, intensity of the QE2 debate should be interesting. NFIB’s Sept small business optimism index due at 7:30am ET. Also worth pointing out, KC Fed’s Hoenig — the lone dissenter on the FOMC and opponent of QE2 — scheduled to speak in late morning.

That ADP report this morning really cooled the stock market’s heels, although the little buggers seem to be getting their bearings back here lately. Meanwhile, the action continues to be in the forex market, where the dollar is getting beaten like a rented mule. Here’s the sober take on it on the Markets Hub.

How far can the Fed push the stock market by jawboning? We’ll soon find out. From our colleague and stocks technician Tomi Kilgore:

It won’t get any easier for bulls if the DJIA can get to 11000 for the first time since May 4, as heavy congestion between 11000 and 11200 during the second half of April suggests that will be a strong resistance zone. Bulls will also have to contend with the 200-week simple moving average (10988), which helped cap the DJIA in April. In addition, the 61.8% retracement of the decline from the October 2007 high (14198) to the March 2009 low (6470) comes in around 11246. The DJIA’s closing high in April was 11205. DJIA up 4 at 10949, off an intraday high of 10972.

Dow’s currently at 10949, up 5. I’ve been of the mind since early September that the bulls were going to push this thing to at least 11000, that the combination of cheap money, and the implicit promise of more of it to come, as well as the expected benefits of a more “business-friendly” political party taking over Congress would fuel a big rally that could last through election day. Of course, this whole Potemkin village is one choice headline away from falling apart; something, like, oh, say, Greece defaulting on its debt.

Right now, the bulls have got this thing by the horns; we’ll see how long it lasts.

Stocks fly high around the globe, with markets comforted by the notion that central banks are keen to keep the world awash in cash. It’s a perilous path, this printing money, but for now investors seem happy to ignore the longer-term consequences of this short-term fix.

Because there’s no more succinct summary of the current MO than the Journal’s headline at the top of page one this morning: Central Banks Open Spigots.

US dollar index has arrested its decline, currently looking mostly flat; euro pulls back from overnight highs teasing $1.39, recently at $1.382. Only notable data is ADP’s reading on September private payrolls at 8:15 a.m. Gold a little higher at $1,346/oz after going bananas yesterday, crude down a hair.

Stock futures subdued, S&P’s up 4.20, DJ futures up 42. Ten-year note higher, yield at 2.43%.