EmailS&P futures indicate an up open of about seven points on hopes that Europe is moving towards action to address the banking crisis in Spain.
The European Central Bank kept its key lending rate at 1.0%. That was expected. The head of the bank, Mario Draghi, held a press conference in which he implied a fairly dovish stance towards the European debt crisis. His comments were taken to suggest that the ECB is prepared to act, but the comments weren't overwhelmingly clear as to what action is likely. S&P futures declined a few points following his comments.
There are also rising hopes that the Federal Reserve will take further action to address the weak US economy. The Wall Street Journal has an article titled "Fed Considers More Action Amid New Recovery Doubts."
The global financial markets are yoked to the decisions of central bankers.
US economic data showed a revision in productivity for the first quarter to -0.9% from a previously reported -0.5%. That was about as expected. These data are revised as a result of the known revisions to GDP and thus don't have much market impact. Unit labor costs, which can be a measure of inflationary pressures, were revised to 1.3% from a previous 2.0%. That year-on-year gain indicates that wage costs aren't a significant inflationary concern at this time.
The market is looking up this morning after yesterday's solid gains. That is certainly helpful, but it is reminiscent of the week of May 18-21, when the S&P rose steadily, apparently setting a better tone. Then, of course, the market dropped fairly sharply the following week. The improved stability and hopes for further central bank action to support global markets is widely seen as a positive, but few are doing backflips over the near-term outlook.
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