A bully new year?
Stock futures suggest strong start to 2006 as investors look ahead to busy week for econ readings.
NEW YORK (CNNMoney.com) - Tuesday's first trading day of the new year looked as though it would get off to a bullish start, in a week that will see a number of closely watched economic readings.
U.S. stock futures were up, indicating a higher opening for stocks.
The first economic report of the week is due at 10 a.m. ET when the Institute of Supply Management's releases its take on growth in manufacturing. Economists surveyed by Briefing.com forecast that the closely watched ISM index slipped to 57 for December from 58.1 reading in November. But any reading above 50 indicates continued growth in the sector.
At 2 p.m. ET comes the minutes of the December meeting of the Federal Reserve's Open Market Meeting, when policy makers at the central bank signaled they may be getting close to ending their series of interest rate hikes. Investors and economists are both in agreement that at least one more quarter-percentage point rate hike is likely at the Jan. 30 meeting, but they'll be looking to the minutes for clues as to whether the Fed will keep hiking rates past that meeting.
"I suspect the main focus of the day will be the Fed minutes," said Peter Cardillo, chief market strategist at SW Bach. "It looks like we'll get a strong start on the strength in overseas markets, but we'll probably be trading sideways until the minutes are released."
"The key is obviously inflation," Cardillo added. "A lot of inflation talk could reverse the thought that the Fed is ready to pause after the January meeting."
Major markets in Asia closed mostly higher Wednesday, as Australian and South Korean indexes hit record highs. Markets were closed in Japan. Major European markets were strongly higher in early trading.
Other economic readings due this week including December auto sales, due out Wednesday, which will close out what was a disastrous year for General Motors (Research) and Ford Motor (Research), the nation's two largest automakers.
Thursday, major retail chains report their sales for the all-important holiday shopping period. No. 1 retailer Wal-Mart Stores (Research) has already warned that its sales will be at the low end of its forecast range.
Friday brings the closely watched December employment report.
Oil prices started the new year slightly higher in early trading. The February light crude futures contract for NYMEX gained 41 cents to $61.45 a barrel in electronic trading, while the February contract for Brent crude was up 59 cents to $59.57.
Treasury prices were slightly lower in early trading ahead of the Fed minutes, leaving the yield on the 10-year note at 4.40 percent, just below the yield on 2-year note, a situation known as an inverted yield curve that can stir concerns about future economic growth. The dollar lost ground against the euro and the yen.
In corporate news, Liberty Media (Research) unit Starz Entertainment Group said it plans to launch an Internet movie download service Tuesday, backed by partnerships with Microsoft (Research) and Sony (Research).
For a more detailed look at the markets before the open, click here.