U.S. equity futures are trading mixed as the market tries to extend its winning streak to five consecutive days. Little meaningful economic data will be released today, with the weekly Department of Energy inventory reports one of the few data points expected to interest investors. Investors are watching the storms that are expected to hit the Northeast tomorrow, and they will be attempting to gauge its economic impact. Although the weather continues to negatively affect the economy, most analysts are ignoring it and are using it as an excuse for the lowered data. Stocks have now posted the largest four-day gain since late 2011 despite the slowing economy. The CBOE Volatility Index (VIX) fell another 5% and looks to be heading back near the $12 level. The ‘Fear Gauge’ continues to trade in a range from $21 on the upside to $12 on the downside, although higher levels are only reached on short spikes. Volume is low for such a strong rally so investor conviction is still weak on the upside.
Treasuries extended a little lower in follow-through selling after Yellen's testimony yesterday, with some pressure from declines overseas. European bonds underperformed on the upward revisions from the Bank of England's quarterly inflation report and new forward guidance. Supply is also impacting Treasuries ahead of the $24 B 10-year note auction this afternoon. The 10-year yield is back up to the 2.77% level. Stocks in Asian and Europe are solidly higher, but U.S. equity futures have shed most of their overnight gains. Today's calendar is light with just the auction and the Treasury budget. The MBA reported mortgage applications fell 2.0% in the week ended February 7. Earnings due after the close include tech bellwether Cisco Systems (CSCO). The company’s stock usually reacts more to the comments from its CEO than the actual data as the shares have traded flat for the last 5 years.
Stock Stories:
John Deere (DE) –Planted and growing – The agricultural equipment maker posts better than expected top-line revenue and EPS numbers this morning. Equipment saales were up 2% globally but the company expects farm incomes to fall in 2014 as estimates on crops declines. The stock is up over 2% ahead of the opening bell.
Major Economic Reports:
6:00 am CT – MBA Purchase Applications – Down 2% for the week
7:35 am CT – Fed’s Bullard Speaks
9:30 am CT – Oil Inventories
12:00 pm CT – 10-year Note Auction Results
1:00 pm CT – Treasury Budget
Notable Earnings:
Before Market: AB, ANR, DE, DPS, HSP, LO, RCI, SPW, TLM, TMHC, TRI, VAL, VG, WCG
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