Searching for a stock rebound
A day after big selloff, investors keeping an eye on economic reports, oil inventory levels.
March 1, 2006: 7:22 AM EST
NEW YORK (CNNMoney.com) - Stocks looked to recover Wednesday from a 1 percent selloff, waiting for a slew of key economic reports.
Futures were up, indicating a higher open for U.S. markets, after Tuesday's selloff sparked by a fall in shares of Google (Research) on remarks by the search engine's chief financial officer that growth for the tech bellwether will be slower in the future.
Shares of Google, which fell as much as 13 percent immediately after the remarks, recovered to close down 7 percent, and shares of the company were up about 1 percent in Frankfurt trading early Wednesday.
Investors will look at government reports on personal income and spending as well as construction spending in January, due an hour before the market opens. They'll also see the Institute for Supply Management's reading on manufacturing growth for February, due out at 10 a.m. ET..
Personal income is forecast to be up 0.6 percent, compared with a 0.4 percent rise in December, according to economists surveyed by Briefing.com, while spending is seen rising a full 1 percent following a 0.9 percent gain in December.
Construction spending is forecast to post a 1.2 percent rise during the warmest January on record.
"I think futures are up because people are looking ahead to today's numbers and seeing that this economy continues to move ahead very nicely, no matter what problems a specific company may be reporting," said John Silvia, chief economist for Wachovia.
But Silvia said the key reading in Wednesday will be the core PCE deflator in the personal income and spending report. That measures prices paid by consumers outside of food and energy. It posted a 1.9 percent annual increase in each of the last three months, and is expected to stay at that level. The number is seen as closely watched by the Federal Reserve.
"If it stays at 1.9 or slips to 1.8, that should be very reassuring for the markets," said Silvia. "If we get a jump up this number, even just a 2.0, I think there will be a lot of focus that the Fed will keep raising rates beyond its May meeting."
Oil prices were higher ahead of the weekly report on U.S. fuel inventories due at 10:30 a.m. ET. The April light crude futures contract for NYMEX gained 43 cents to $61.84 a barrel in electronic trading, while the April contract for Brent crude rose 67 cents to $62.43.
Major markets in Asia closed lower Wednesday on concerns about Google and the U.S. economy. Major European markets were up in early trading, helped by oil stocks there.
Treasury prices were lower, lifting the yield on the benchmark 10-year note to 4.55 percent from 4.54 percent late Tuesday. The dollar was higher against the yen but lower against the yen.
In corporate news, automakers are due to report February sales Wednesday. General Motors (Research) Chairman and CEO Rick Wagoner said at the Geneva Auto Show that the troubled No. 1 automaker would see "reasonable" levels of U.S. sales but not as high as in January, when it continued to lose market share.
Wagoner also said he hoped to wrap up negotiations by the end of March with Delphi (Research) and the United Auto Workers on compensation for former GM employees at the bankrupt auto parts market, an agreement seen as a key to GM avoiding bankruptcy. He also set a target of breakeven or better results in GM's European operations in 2006.