Reply #19: pre-opening blather

[UpInArms]

09:00 am : S&P futures vs fair value: -6.0. Nasdaq futures vs fair value: -2.0. Early sentiment continues to improve, so much so that the Nasdaq 100 futures briefly inched above fair value. The pre-market bias now has a more neutral-leaning disposition as the GDP report showed faster than expected acceleration in economic growth with a downtick in inflation.

Additional analysis of the report also shows, however, that the data are not an indication of a strong trend going forward since the overall pickup in GDP growth was due to a swing in a number of categories outside of consumer spending, which did not pick up. So far, investors are looking for more than backward-looking data to counter growing concerns that tightening credit market conditions might also curtail economic growth.

08:35 am : S&P futures vs fair value: -8.1. Nasdaq futures vs fair value: -5.0. An advance read on GDP just showed that the U.S. economy grew at a much healthier than expected 3.4% pace in Q2 (consensus 3.2%) compared to the downwardly revised 0.6% growth in Q1. The chain deflator -- a key inflation measure -- ticked lower to 2.7% (consensus 3.4%).

The response in stocks so far has been positive but by no means has the futures market yet found the dated data encouraging enough to climb above fair value. Bonds, though, have exhibited a relatively muted response; the 10-yr note is still up 8 ticks to yield 4.75%.

08:00 am : S&P futures vs fair value: -10.0. Nasdaq futures vs fair value: -10.8. Early indications suggest yesterday's broad-based selling efforts will carry over into this morning's open. At 6:30 ET both the S&P 500 and Nasdaq 100 futures were trading above fair value; but they have since taken a sharp turn for the worse in sympathy with a reversal on the European bourses.

With worries about a possible credit crunch already weighing heavily on investor psyche, reports that Cadbury Schweppes plc (CSG) has become the first company to delay a deal because of "extreme volatility" in debt markets has exacerbated the worst of those fears and fostered a risk-averse mindset. There's an additional sense of reserve on the part of buyers before an advance read on Q2 GDP hits the wires at the bottom of the hour.

06:18 am : S&P futures vs fair value: -1.7. Nasdaq futures vs fair value: -1.0.

06:18 am : FTSE...6226.20...+15.00...+0.2%. DAX...7451.05...-57.91...-0.8%.

06:18 am : Nikkei...17283.81...-418.28...-2.4%. Hang Seng...22570.41...-641.28...-2.8%.