US stocks surged to their highest levels since early August. Doubts about the ability of European leaders to tackle the crisis eased a bit after German government sources said there were no serious differences between Germany and France ahead of a closely watched summit in Brussels.
Robust US profits have driven much of the US stock market’s gains from the March 2009 lows, but investors have worried that corporations will be unable to sustain that profit growth in a sluggish global economic climate.
Looking at the S&P 500 futures market, S&P 500 third-quarter earnings are expected to have risen 13 percent from a year earlier, up slightly from growth of 12.1 percent posted for the second quarter.
In the Dow Jones futures market, the stock market index will need to stay put above 11380 so as to reach the 11850 mark which looks very likely to be hit. Above this mark we have the all-important 12000 mark with 12250 as a target should a sharp move take place.
Having said that, a recent City Index UK report suggested that, “Even [with the Dow looking strong] caution is still needed if the 11380 mark is violated which could possibly help the bearish traders drag the stock market index down to the 11200 price support mark. Momentum is bullish but not as robust as one would expect to have on a breakout as we’ve just seen”.
In US data a weaker U.S. economic outlook in September led businesses to be wary of spending and building up inventories ahead of the holiday sales season, the Federal Reserve said. The Philadelphia Federal Reserve Bank said factory activity in the US mid-Atlantic region unexpectedly expanded in October to its highest level in six months, supporting views that the US economic recovery is progressing, albeit at a slow pace.
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