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Stocks drift higher into long weekend

David Russell (david.russell@optionmonster.com)

Stocks are drifting higher into Labor Day as investors shrug off geopolitical risks with major economic news coming next week.

S&P 500 futures are up about 0.25 percent and back near their highs from earlier in the week. European markets are fractionally higher, and Asia was mostly positive overnight, led by mainland China.

The S&P 500 has been consolidating around 2000 for the last week following a quick rally earlier in the month. Investors have mostly ignored reports that Russian troops have entered Ukraine and have instead focused on increasingly positive economic news in the United States. This week, for instance, saw better-than-expected gross domestic product, consumer confidence, and jobless claims.

More big numbers come after the long holiday weekend. The Institute for Supply Management's manufacturing index is due on Tuesday, ADP's private-sector payrolls report comes out Thursday, and non-farm payrolls will be released Friday.

Today's agenda brings personal income at 8:30 a.m. ET, the Chicago Purchasing Managers Index at 9:45 a.m. ET, and the final reading of consumer sentiment at 9:55 a.m. ET. None of them is likely to have a strong impact on sentiment.

Retailers have emerged as the strongest group in the last two weeks' rally, representing the first time since a terrible holiday season that they've led the broader market. Our researchLAB market scanner shows capital returning to other areas that outperformed earlier in the year but had lagged in recent months: biotechnology, energy, small-caps, and railroad suppliers (partially an energy play because they supply tanker cars). Metallurgic coal, basic metals, and Chinese Internet stocks have lagged.

In company-specific news, Splunk rose 6 percent and Avago Technologies is up 5 percent after reporting better-than-expected earnings and revenues.

Oil is up about 0.25 percent, and copper is higher by 0.5 percent. Gold and silver are fractionally lower. In foreign-exchange markets, the Australian and Canadian dollars are higher, and the euro is eking out a small gain.

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