US pre-open: New York seen heading higher on blue chip strength

New York Stock Exchange © Getty Images
US stocks could record new all-time highs

US stocks are seen heading higher as they look to maintain the strong momentum of the last two sessions.

Jasper Lawler, analyst at CMC Markets, is looking for the S&P to open six points higher at 2,067 with the Dow Jones putting on 42 points higher at 17,820. The Nasdaq is seen 14 points higher at 4,281.

Lawler says that if New York manages to sustain its vigour today, it could record new all-time highs in the Dow Jones and S&P 500.

He notes that blue chips have led the way in the latest rally with tech stocks on top. On Thursday, Oracle was up 10% after reporting strong earnings, while Apple and Microsoft also traded strongly. Small caps saw gains but they lagged the momentum you might expect on such a bullish day for stocks.

Lawler says: “Investors are choosing to stick with the safety of the most liquid stocks in case a quick exit is needed in another meltdown,” he says.

He adds: “International concerns are still present but the words and actions from the Central Bank of Russia to stem the tide of selling in the rouble have pulled emerging markets out of panic mode.

“A let up in emerging market selling as well as Janet Yellen’s comments that overseas concerns should not be a big problem to the US economy added to the relief in the rally.”

On the corporate front, McDonald’s Corp, which put on 2.2% yesterday, could move higher again following a TV appearance from activist investor Bill Ackman reignited prospects of the restaurant chain spinning off its real estate empire in to a REIT. Ackman reckons the world’s largest restaurant chain could be managed better.

Elsewhere, BlackBerry is expected to report a quarterly loss of 5c per share on revenue of $936m. Lawler notes that the company recently released its potentially game-changing enterprise software BES 12 that enables enterprise customers to use non-BlackBerry devices as well as BlackBerrys. The company also sold its entire retro-orientated “passport” line of phones showing that there are still a core set of users demanding its devices.

Lawler says: “Apparently US president Obama is a BlackBerry fan because of the addictive keyboard and strong security features. Recent hacking events including of celebrity Apple iCloud accounts make the security associated with BlackBerrys a key consideration for corporate customers.”