Traders and investors are looking at a higher open for stocks amidst a plethora of economic data, which had prices at the producer level rising due to higher energy prices, but the real lift looks to be some carry-over from yesterday's impressive rally on thoughts of "peace with Iraq" if not at least a slight delay on the war front.
This morning's economic data had the Producer Price Index rising 1.0% in February, which was a slower rate of price increase than January's surprising 1.6% gain, however when the more volatile food and energy components were removed, the core PPI fell -0.5% in February. This gives insight as to how the recently monthly surges in oil have impacted prices at the producer level, as other components decline. The energy component jumped 7.4%, which has the annualize PPI standing at 3.5%, while the year- over-year core rate is at a modest 0.1%.
Oil futures were sharply lower in London with the May IPE Brent contract last down $1.27 a barrel to $30.50. Reuters is reporting that the Saudis are committed to 29.5 million barrels to the U.S. Gulf for May delivery. The April Light Sweet Crude Oil futures contract (cl03j) is currently down $1.11%, or 3.08% at $34.90 after setting an early morning low of $34.22.
Secondly, U.S. Energy Secretary Spencer Abraham said in Budapest Friday that he expects OPEC members will cover potential disruption to Iraqi crude supplies.
Other economic data released had January business inventories rising 0.2%, which was inline with consensus forecast. Also released was the fourth-quarter current account, which came in at -$136.9 billion and worse than the -$136.1 billion forecast.
Later this morning, at 09:15, February Industrial Production is forecasted to show a 0.1% gain, while February Capacity Utilization is expected to be 75.7%. Then at 09:45 AM, the closely monitored University of Michigan Sentiment for March will be released, with consensus estimates at 78.0.
This morning's bond market reaction to the economic data is mixed, with marginal buying in the shorter-dated 5-year Treasury, which has its YIELD ($FVX.X) slipping back lower at 2.703%. The longer-dated 10-year and 30-year are unchanged.
We have seen some pullback in the stock futures market. It should be noted that we are now rolling forward to the June futures contracts. Currently, S&P futures (sp03m) are gaining 3.8 points to 836, which is off the morning highs of 842. NASDAQ futures (nd03m) are higher by 5 points at 1,038 after a morning high of 1,046, while Dow futures (dj03m) are tracking 38-point higher at 7,840, after having traded a morning high of 7,880.
One reason for the declines from morning highs in the futures is a rumor circulating that U.N. weapons inspectors have left Iraq.
Adding to this speculation/rumor is that President Bush and Secretary Powell will give speeches in the Rose Garden at 10:00 AM EST. It may actually be the announcement of this speech, which is the source of the rumors that U.N. inspectors are evacuating Iraq. Often times, any announcement of the President giving a speech, will spark rumors.