TradeMaster Daily Stock Alerts Blog

Small-cap stocks were expected to open slightly lower Monday, pressured by overseas stock market declines and a sobering inflation picture on this morning’s data front. However, losses should be limited by a pullback in crude oil prices. Overnight action in stock equities suggest a dip of about 0.2% for the Russell 2000 (NYSE:IWM), which would translate to an open near 714.70.

Personal income data released ahead of the opening showed a larger-than-expected bump in the core PCE index, which is considered a key gauge of inflation. The core PCE was up 0.3% vs. the forecast for a rise of 0.2% and the year-over-year PCE price index was up 4.1%, which was the largest gain in 17 years. The immediate reaction in stock index futures was subdued, but Treasury futures edged lower as inflation lowers the value of fixed income instruments. The headline figure for personal income came in at 0.1%, which was the lowest reading since April 2007, but which was better than the analyst forecast for a dip of 0.2%.

The market will also get a chance to react to factory orders numbers at 10:00 a.m. ET, but that report seldom has much of a market moving impact on equities.

In overnight action, equities markets around the world were on the defensive, and European shares were pulled down by big losses for HSBC bank, which took a $14 billion hit from losses tied to U.S. home loans and other asset write downs. Japan’s Nikkei was off more than 1% amid worries about the financial system, and those concerns were expected to spill over into U.S. trading this morning.

Crude oil prices reversed overnight gains tied to tension about Iran’s commitment to move forward with their nuclear program, with crude slipping about $1 dollar a barrel back toward $124 as concerns about rising output countered the need for immediate risk premium tied to Gulf of Mexico tropical storms.

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