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U.S. stocks: Futures higher as ECB easing hopes rise, but oil drops below $45

U.S. stock futures were bolstered Tuesday by continuing signs that the European Central Bank will need to implement quantitative easing soon, though a slide in crude oil prices to below $45 a barrel is hemming in those gains.

Investors will be focusing on earnings results, as Alcoa Inc. unofficially kicked off the season with better-than-expected results on Monday after the market close. Alcoa Inc. shares were higher in premarket.

Trimming earlier gains, futures for the Dow Jones Industrial Average DJH5, +0.47% rose 86 points, or 0.5%, to 17,657, while those for the S&P 500 index SPH5, +0.68% added 8 points, or 0.4%, to 2,030. Futures for the Nasdaq-100 index NDH5, +0.73% rose 21 points, or 0.5%, to 4,188.

On Monday, stock futures rose, only to see gains fade as Wall Street caved to the pressure of falling oil prices. The S&P 500 SPX, +1.16% dropped 0.8% to 2,028.26 and the Dow industrials DJIA, +1.36% lost 0.5% to 17,640.84.

Weak data from Europe — falls in wholesale prices in Germany and consumer prices in Greece — were cited as a reason for rising futures. The weak data are seen to underpin the need for the ECB to pump money into the eurozone economy and act at its next meeting on Jan. 22. Much as on Monday, as the Stoxx Europe 600 SXXP, +1.34% rose, U.S. stock futures followed.

February U.S. crude CLG5, -1.37% hovered under $45 a barrel, down nearly 3% to a near six-year low. The latest decline came after the United Arab Emirates’s oil minister Suhail Mohamed Faraj al-Mazrouei said the Organization of the Petroleum Exporting Countries will stick to its decision to keep oil output unchanged, regardless of current oil prices.

Investors also will be watching for the U.S. Energy Department to publish its monthly oil market report on Tuesday.

For stocks, BlackRock’s global chief investment strategist Russ Koesterich argued in his weekly commentary that “lingering geopolitical issues and a pending Federal Reserve (Fed) rate hike” are to blame, and not just oil, for market volatility.

Koesterich said investors should expect volatility to be elevated, compared with levels seen from 2012 to 2014. Strategies that thrive in low volatility environments — momentum strategies, mainly — may struggle, so investors should put more value-oriented and high-quality names in their portfolios, he advised.


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