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Stocks hovering near record levels

David Russell (david.russell@optionmonster.com)

Stocks are drifting lower today but remain near record highs ahead of several important catalysts this week.

S&P 500 futures are down about 0.1 percent this morning, matching the small declines in Europe. Asia was mostly lower overnight as profit-takers knocked China down 2 percent. Oil is fighting higher.

The S&P 500 has fluctuated between 2100 and 2117 for the last seven sessions after breaking out to new highs in mid-February. A combination of modest economic growth, low interest rates, and demand for stocks has kept sentiment bullish.

We're also in the midst of a busy week for news and events, though today is the quietest session. Tomorrow brings ADP's private-sector payrolls report, followed by the European Central Bank's monetary announcement on Thursday and non-farm payrolls on Friday. The ECB is likely to be the most important because its monetary stimulus agenda will influence interest-rate moves by U.S. Federal Reserve.

There was also bullish data from Europe today as German retail sales beat estimates by a wide margin. That follows positive inflation data on Monday and continues to reflect strengthening across the Atlantic.

In company-specific news today, Best Buy rose more than 4 percent after reporting better-than-expected fourth-quarter profit. AutoZone climbed almost as much after earnings and sales beat consensus. Dick's Sporting Goods gained almost 3 percent as well after announcing positive results. Nutrisystem popped yesterday afternoon on strong profit but hasn't traded yet today. Monthly automobile sales are due later this morning. TiVo, Ambarella, and Smith & Wesson announce results this afternoon.

The numbers from BBY, AZO, and DKS match the recent pattern of strength in the consumer-discretionary space. Hoteliers, media companies, and auto-related stocks have also outperformed, according to optionsMONSTER's proprietary researchLAB market scanner. The Nasdaq has been the other major source of strength on its way to reaching the 5000 mark, led by e-commerce stocks, software makers and solar-energy. Utilities have lagged as rising interest rates reduce the appeal of their dividends.

Brent crude oil gained 2 percent and West Texas Intermediate is up almost 1 percent this morning. Gold and silver rose fractionally, and copper fell almost 2 percent.

Foreign-exchange trading is modestly bearish, with the euro lower and the Japanese yen higher against most other currencies. The Australian dollar is the one outlier, rallying after the country's central bank defied expectations by not cutting interest rates.

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