Dow May Rise Following Inflation Report

LONDON -- Stock index futures as of 6:20 a.m. EDT indicate that both the Dow Jones Industrial Average (DJINDICES: ^DJI  ) and the S&P 500 (SNPINDEX: ^GSPC  ) may open 0.14% higher this morning.

European markets moved cautiously higher this morning. In the U.K., consumer price inflation rose to 2.7% in May from 2.4% in April, meaning that inflation remains above the Bank of England's 2% target. In Germany, cable TV operator Kabel Deutschland hit a record €85 per share following news that Liberty Global had submitted a bid for the firm, which recently received an informal offer from Vodafone. As of 7:15 a.m. EDT, the FTSE 100 is up 0.76%, the German DAX is flat, and Spain's IBEX 35 is up 0.64% despite news that bad debt levels in Spanish banks rose to 10.9% in April from 10.5% in March.

In the U.S., investors are likely to be cautious ahead of tomorrow's Fed meeting. At 8:30 a.m. EDT, May's Consumer Price Index report will be published. Consensus forecasts suggest that inflation rose by 0.2% in May after falling 0.4% in April. Low inflation is seen to be supportive of further Fed easing, so markets may react positively if inflation is at or below expectations. Also due at 8:30 a.m. EDT are May's housing-starts and building-permits reports. Expectations call for a rise in housing starts to 953,000 last month from 853,000 in April. The number of new building permits issued in May is expected to be 973,000, down 2.7% from April.

In corporate news, few companies are scheduled to report earnings today. FactSet Research Systems is expected to report third-quarter earnings of $1.15 per share before this morning's opening bell. After the close tonight, Adobe Systems is expected to report second-quarter earnings of $0.34 per share, while La-Z-Boy is expected to report fourth-quarter earnings of $0.27 per share. Other stocks that could be actively traded this morning include Sony, which is 2.8% higher in premarket trading following reports that Daniel Loeb's hedge fund, Third Point, has increased its stake in the firm. Netflix may also be actively traded after closing up 7% yesterday following news of its new deal with DreamWorks Animation.

Finally, let's not forget that the Dow's daily movements can add up to serious long-term gains. Indeed, Warren Buffett recently wrote, "The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions." If you, like Buffett, are convinced of the long-term power of the Dow, you should read "5 Stocks To Retire On." Your long-term wealth could be transformed, even in this uncertain economy. Simply click here now to download this free, no-obligation report.


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