Wall St. set to open
higher as tech selloff stalls
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[June 28, 2017]
By Tanya Agrawal
(Reuters) - Wall Street looked set to open
higher on Wednesday as the two-day spell of selloff in technology stocks
stalled and after a report that investors overreacted to ECB chief Mario
Draghi's view on fiscal stimulus.
Euro zone central bank sources told Reuters the market had
overinterpreted Draghi's comments on Tuesday that the ECB is ready to
start withdrawing the emergency stimulus for the economy.
The sources, however, clarified that he intended to signal tolerance for
a period of weaker inflation, not an imminent policy tightening.
The technology index has risen about 17 percent since the start of the
year, making it the best performing sector among major S&P sectors.
However, investors, concerned with the sector's lofty valuations, have
been shifting to defensive sectors.
Equity valuations have come under focus at a time when inflation remains
low, recent economic data has been tepid and President Donald Trump's
pro-growth policies face delays.
The S&P 500 is trading at nearly 18 times forward earnings estimates,
well above its long-term average of 15 times.
Federal Reserve Chair Janet Yellen said on Tuesday the central bank
would continue raising rates gradually and that by standard metrics,
some asset valuations look high.
Fed Vice Chair Stanley Fischer warned the central bank must remain
vigilant in monitoring financial stability risks.
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San Francisco Fed head John Williams said investors may be getting
overly complacent about risks and that "the stock market seems to be
running pretty much on fumes."
A planned vote on Republican healthcare bill to dismantle the Affordable
Care Act was put off to after the Senate's July 4 recess.
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The healthcare legislation, which has encountered resistance from several
Republicans, is the first plank of President Donald Trump's domestic policy
agenda, with investors eager for him to move onto his other plans, including tax
cuts, infrastructure spending and deregulation.
Trump's promises of a pro-growth agenda is partly behind the S&P's 13 percent
rise since the Nov. 8 election.
"A setback for health reform could put in question tax reform this year
unraveling the 'Hope Rally'", Peter Cardillo, chief market economist at First
Standard Financial.
![](http://archives.lincolndailynews.com/2016/Aug/26/images/ads/current/best_friends_sda_120215.png)
Dow e-minis were up 35 points, or 0.16 percent, with 37,613 contracts changing
hands at 8:40 a.m. ET (1240 GMT).
&P 500 e-minis were up 5.5 points, or 0.23 percent, with 259,971 contracts
traded.
Nasdaq 100 e-minis were up 11 points, or 0.19 percent, on volume of 72,754
contracts.
Oil edged lower toward $47 a barrel after an industry report said U.S.
inventories increased, reviving concerns that a three-year supply glut is far
from over. [O/R]
The market was also gauging the impact of a global ransomware attack that
disrupted computers at banks and large companies.
Spectranetics jumped 26.6 percent to $38.50 after Dutch healthcare company
Philips agreed to buy the company for $2.16 billion.
KB Home edged up 0.5 percent to $22.93 after the homebuilder increased its
full-year forecast.
(Reporting by Tanya Agrawal; Editing by Arun Koyyur)
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