Techs should continue to gain confidence Tuesday, and continue Monday's modest rally in hopes that the Fed will only nudge rates up a quarter point. Asia and Europe were mixed, with Japan hitting a 1999 high. The Dow is set to open slightly lower.
The broken record of interest rate predictions takes its last rotation today. A quarter-point raise is still the best bet for the Fed's rate hike. The Federal Reserve begins its meeting Tuesday, and is scheduled to announce its decision Wednesday at 2:15 EDT.
The need to control inflation was reinforced by Tuesday's announcement that consumer spending jumped 0.6 percent in May. A report released by the Commerce Department showed spending has increased since April, which was a 0.4 percent gain. The giddy spending on durable and non-durable goods heightened speculation the economy is growing too fast.
The Commerce Department also announced the savings rate was a negative 1.2 percent in May, the lowest recorded level in history. The personal savings rate, the percentage of household income not consumed, has been negative for six consecutive months. Though Americans may be spending beyond their means, they may be investing more in the market. Savings that are in the stock market are not included in the savings rate.
The Inter@ctive Week @Net Index rose 7.65 to 297.
Expect CMGI Inc. (Nasdaq: CMGI), E-Loan Inc. (proposed ticker: EELN), Metro One Telecommunications Inc. (Nasdaq: MTON) and Seagate Technology Inc. (NYSE: SEG) to be among Tuesday's most active techs.
Frontier Corp. (NYSE: FRO) may also move on disappointing earnings report for the second quarter, but it's still sought after by Qwest (Nasdaq: QWST) and Global Crossing (Nasdaq: GBLX).
IBM Corp. (NYSE: IBM) is in talks to acquire Sequent Computer Systems Inc. (Nasdaq: SQNT) according to "one person familiar with the matter" cited in the Wall Street Journal.
Facing the reality of a certain raise in short-term interest rates, investors responded with a sustained rally Monday as the Dow Jones industrial average moved up 103 points to 10,655.15 while the Nasdaq charged up 46 points to close at 2,599.03.
At the Bell
The Dow Jones industrial average is set to open about 17 points lower. The Standard & Poor's 500 index for June futures contracts was down 2.2 points to 1341 at 7:35 a.m. EST in 24-hour electronic trading.
Trading in Asia was mostly up. The Nikkei 225 rose 0.98 percent to 17,782, hitting a high for the year. Singapore's Strait Times index rose 0.81 percent to 2,181 and Hong Kong's Hang Seng fell 0.54 percent to 13765.
European markets were mixed. London's FTSE 100 dropped 0.76 percent to 6,356 in anticipation of the U.S. rate hike. The CAC 40 in Paris gained 0.28 percent to 4,477 and the Xetra DAX in Frankfurt was up 0.52 percent to 5,384 at 6:50 a.m. EST.