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U.S. Futures Decline

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U.S. futures declined this morning, partly attributed to Wal-Mart's announcement that April sales rose a less-than-expected 4.6%, below the forecasted 5-7%. Those market pundits calling for a rebound in U.S. markets have pinned their expectations on continued consumer spending. Wal-Mart is a component of the Morgan Stanley Consumer Index, the $CMR. Although the $CMR has been rising lately as other stocks rallied, reflected in the $CMR's recent new P&F buy signal, the $CMR's strength relative to the $SPX reversed late last year into a column of "O's," indicating some weakness relative to the $SPX.

Today's weakening in the futures perhaps also reacts to the declines seen in Asian and European markets. Many of the global indices I cover slipped beneath key levels in Thursday's trading, with the Nikkei being the first.

Having climbed above 8000, the Nikkei had struggled earlier in the week to sustain levels above the 8110-8125 resistance zone, but today gave up the effort. The dollar's weakening against the yen hurts Japanese exporters and they led the declines. Optimism had been growing that a coalition-formed emergency economic plan would stem the selling of bank-held equities, but now fears grow that some of the measures will not be adopted. The Nikkei opened down 37.10 points and traded in the red all day, closing down 78.22 points or 0.96%, at 8031.55.

The Bank of England and ECB met today to decide interest-rate policies, with both leaving interest rates unchanged. The ECB had not telegraphed intentions to change rates, so its decision was expected. Although most also thought the Bank of England would leave rates unchanged, many felt it was not as easy to predict their decision. Recent U.K. economic numbers had been weaker than expected, but the sterling had also fallen against the euro in what some deemed to be an inflationary threat, precluding an easing in rates. While the Bank of England's announcement led to a further softening in European markets, the ECB's decision was deemed to be the bigger disappointment. The strengthening euro led many to call for an easing in interest rates by the ECB, as Germany in particular suffers from the dual effects of weakening domestic demand and less demand for its exported goods as the euro rises against the dollar. Ahead of these announcements, most European markets already traded down, and afterwards they declined further, sending our futures spiraling down with them. As of 8:30 ET and just ahead of the release of U.S. economic numbers, the FTSE 100 traded down 58.90 points or 1.48%, to 3934.00; the CAC 40 traded down 76.42 points or 2.53%, to 2947.54; and the DAX traded down 79.56 points or 2.65%, to 2926.08.

The U.S. may be on a minor Fed watch today, too, as the March FOMC minutes are released this afternoon. The minutes will be old news, but might prove interesting reading to those wondering about the discussion that led to the Fed's reluctance to give a bias statement at that meeting.

Today's economic numbers also included initial claims, released this morning at 8:30 ET. Expectations for the week's initial claims were for 440K, with last week's number at 448K. Those numbers showed initial claims down 28,000, to 425,000, indicating a better-than-expected number. Continuing claims were at a six-month high of 3.61 million, and the four-week initial jobless claims were at a year-high of 446,000.

Just after the release of these numbers, the S&P futures were down 7.20 points, the Dow futures were down 68 points, and the Nasdaq futures were down 14.00 points.

Fair value for the S&P 500 today is $-.43. That price will not change during the session. HL Camp & Company set their computers for program buying at $.40 and for program selling at $-1.79. Their fair value for the NDX today is $1.75, with their computers set for program buying at $4.06 and program selling at $-.95.

Linda Piazza

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