Stocks are set to open higher Tuesday, as international stock markets rebound from a four-day skid. Two hours before the opening bell on Wall Street, stock index futures indicated that the Dow Jones Industrials ($INDU) could gain as much as 90 or 100 points in early trading. The NASDAQ ($COMPQ) is expected to gain 15 or 20.
Stocks bounced higher around the globe Tuesday. Japan's Nikkei Index, for instance, is up 202 points, or 1.2%. The Nikkei had tumbled nearly 1,500 points or 7.84% during the previous four trading days. Key markets across the Asia/Pacific are also heading higher, with the Hang Seng Index up 2.11% and the Shanghai Composite gaining 2%. Stocks saw early strength in Europe as well.
Consequently, the stage is set for a rebound in US equities, as investors take advantage of a global equity market rout to buy shares at cheaper prices. The Dow Jones Industrial Average has lost nearly 600 points, or almost 5% during the four-day slide.
Economic data might also affect early trade. A report on productivity is due out at 8:30 a.m. Eastern time. Economists expect the revised number to fall to 1.7% in the fourth quarter, down from 3% in the prior period. Factory Orders numbers for January are out at 10:00. Economists are forecasting a decline of 4%, compared to a rise of 2.4% the month before.
Among other stocks to watch Tuesday, Citigroup (C) will help the Dow in early trading after the financial services giant announced plans to buy Tokyo-based Nikko Cordial. The deal represents the largest acquisition ever in Asia. C is trading up 40 cents to $49.65 on the news. Altria (MO) will also help the Dow after Deutsche Bank raised the rating on the stock to "buy" from "hold." JP Morgan Chase (JPM) will be in focus as COE Jamie Dimon hosts an investor meeting today.
Commodity-related stocks might rebound. Crude oil is up 38 cents to $60.45 a barrel. Gold (April) has added $7.00 to $646.30 a barrel. Meanwhile, bonds are losing some of the safe-haven bid that infected trading over the past few days. The benchmark ten-year Treasury note is down 5.5 ticks and its yield, which has not been able to break below 4.5% during the recent rally, is now at 4.52%.
Overall, there is not much stock-specific news to report early Tuesday morning and the focus is on international developments. The rebound in the international markets is a good omen for the US stock market. Stability in commodity-related stocks could also help. If so, levels of market anxiety might begin to ease and the CBOE Volatility Index ($VIX), which yesterday moved above 20% for the first time in more than six months, will fall. That, in turn, will suggest that investors are indeed becoming more upbeat and the improved sentiment will help push stock prices higher Tuesday morning.
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