After a lull since February, the S&P 500 is back making record highs. Central bank support in the form of the European Central Bank front-loading its QE program before the summer is set to send all major US equity benchmarks to a higher open on Tuesday.
Benoit Coeure, the Vice President of the ECB announced the central bank intends to increase its asset purchases in May and June for seasonal liquidity reasons. It’s likely not a coincidence that the ECB is upping the ante on its bond-buying following a major bond-market sell-off especially with Greece’s debt negotiations going to the wire.
CPI data showing deflation in the UK for the first time on record and lower than expected European inflation is boosting the US Dollar and sending Oil prices lower in European trading on Tuesday. The dollar and oil impact on multinationals and the energy sector respectively could be a headwind to further gains in US equities indices.
The housing market is one of the areas of strength in the US economy according to the Federal Reserve so housing starts and building permits data today will be instructive given the weakness seen in other areas. Both are expected to show modest improvement.
The earnings focus will be on reports from retailers Wal-Mart (NYSE:WMT), Home Depot Inc (NYSE:HD), TJX Companies Inc (NYSE:TJX) and also the newly-listed Etsy Inc (NASDAQ:ETSY) on Tuesday.
Wal-Mart is expected to show higher revenues and foot-traffic in the first quarter but its investment in its stores is expected to see profitability slip from the same time last year. The company’s guidance on the impact of its minimum wage increase that began in April as well as the effect of gas prices on customer spending will be key.
Futures suggest the:
S&P 500 will open 5 points higher at 2,134 with the
Dow Jones expected to open 49 points higher at 18,347 and the
Nasdaq 100 12 points higher at 4,523.
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