Wall Street to open lower after Tuesday rally, results eyed
By Chuck Mikolajczak | February 7, 2013 1:28 AM EST
Stocks were poised to open lower Wednesday, indicating the S&P 500 may retreat as it faces resistance to further gains beyond five-year highs in the wake of a 1-percent rally on Tuesday.
A 6-percent advance this year so far has lifted the S&P 500 index to its highest since December 2007, while the Dow <.DJI> briefly climbed above 14,000, making it a challenge for investors to continue pushing the equity market upward amid a dearth of fresh trading incentives.
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"You knew a correction was coming; the question was whether they were going to tease you and get it close and then start selling it off or get it up to 14,000 and then start to make a move to the sell side," said Gordon Charlop, managing director at Rosenblatt Securities in New York.
"We got a quick move and it's really just not healthy for markets to go one way, so the idea that a little bit of a correction is due isn't troublesome to me at all."
According to Thomson Reuters data through Tuesday morning, of 278 companies in the S&P 500 <.SPX> that have reported earnings, 68.7 percent have exceeded analysts' expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters. In terms of revenue, 66 percent of companies have topped forecasts.
In another positive sign for profits, fourth-quarter earnings for S&P 500 companies are now expected to grow 4.5 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.
S&P 500 futures fell 6 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 51 points, and Nasdaq 100 futures declined 9.75 points.
The benchmark S&P index rose 1.04 percent Tuesday, its biggest percentage gain since a 2.5-percent advance on January 2, when legislators sidestepped a "fiscal cliff" of spending cuts and tax hikes that could have hurt a fragile U.S. economic recovery.
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(Editing by Bernadette Baum)
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