Stocks edge higher in consolidation

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Stocks are up slightly today as they continue to consolidate after breaking out to all-time highs.

The S&P 500 and the Nasdaq 100 futures are both up about 0.2 percent. Europe is modestly higher and Asian markets were mixed in the overnight session, with Shanghai down 1 percent and Japan's Nikkei up 2 percent.

The S&P 500 bounced yesterday, closing up more than half a percent after recovering from earlier losses. The index rallied more than 5 percent in the first half of May before retreating. It's now trying to hold support at a key consolidation level from earlier in the month and at its 30-day moving average.

Our researchLAB market scanner showed a range of price action yesterday, with utilities leading early but ending the session near the bottom of the stack. Consumer staples closed as the strongest sector after lagging in the previous month, while energy was strong throughout the session.

The main theme developing appears to be that investors are increasingly optimistic about the global economy, reflected in ongoing strength for basic materials, industrial metals, energy, and emerging markets. Semiconductors also bucked weakness in the broader technology sector as hopes increase over the promise of smartphone demand for companies such as Intel.

There are no market-moving data releases today, though tomorrow brings the ADP private-sector payrolls report and service-sector data from Europe and the United States. Thursday features monetary policy from Europe and Friday is dominated by the pivotal non-farm payrolls report.

Currencies are modestly bullish as the euro continues to gain and the Japanese yen remains under pressure. The weak yen, a major catalyst for the market's recent gains, seems to be holding a key level against the U.S. dollar that could indicate more declines are coming. Such a development would probably support bullishness toward equities globally.

Commodities are mixed, with oil down slightly but copper posting small gains. Agricultural foodstuffs and precious metals are down.

In company-specific news, discount retailer Dollar General declined more than 5 percent after lowering full-year guidance. Online gaming stock Zynga is also fighting back from earlier losses after announcing big layoffs and weak bookings.


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