EQUITIES FUTURES CLOSE FLAT, REFLECTING MARKETS INABILITY TO FIND ELUSIVE SANTA RALLY
U.S. equities seem poised to exit the year with, at best, a cheer that 2008 is over and that the long rebuilding processes will begin in 2009. Sector reaction to the escalating conflict in Gaza was somewhat mixed. Energy stocks received some positive interest, as the possibility of Middle Eastern oil disruption seems to have put a floor under the energy price skid for the time being, and brought back the perception of value to the sector. Negative sentiment seems to have won out over the session, as the unraveling of a $20 billion deal between Dow Chemical and the Kuwait government pummeled the stock for a nearly 20% drop. Traders and investors are under the impression that the breakdown of this deal will deny Dow a cash infusion that it had been planning to use in its takeover of rival Rohm Haas.
Retail stocks continued to slide in the wake of the worst revenues for the sector in nearly 40 years. Expectations are high that this could be the last gasp for a number of retailers, as debt levels continue to climb, and slashing of prices seem unable to lure the consumer out from their perceived Groundhog Day. Early 2009 is likely to see a resounding shakeup in the retail world, which could mirror the consolidation of financial institutions that took place in 2008. Overall volume and volatility was relatively light as the remaining participants are not likely to set in large positions ahead of the New Year and administration.
Technically, the markets have little new information to show. March Dow futures are likely to remain range bound between 8200 and 8600. The market will likely trade in continually narrowing channels through the early part of 2009. End-of-year rallies will likely be limited in scope and should stall at the 8620 range.
March Dow Futures settled at 8485, up 16. March S&P Futures settled at 870.10, up 1.50. NASDAQ Futures settled at 1175.50, down 13.00.
Rich Roscelli and Paul Brittain
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