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US STOCKS-Wall St set to open higher as tech selloff stalls
June 28, 2017 / 1:08 PM / a month ago

US STOCKS-Wall St set to open higher as tech selloff stalls

4 Min Read

* Vote on healthcare bill delayed until next month

* Oil falls after increase in U.S. crude inventories

* Spectranetics jumps after $2.16 bln Philips deal

* Futures up: Dow 35 pts, S&P 5.5 pts, Nasdaq 11 pts (Adds details, comment, updates prices)

By Tanya Agrawal

June 28 (Reuters) - Wall Street looked set to open higher on Wednesday as the two-day spell of selloff in technology stocks stalled and after a report that investors overreacted to ECB chief Mario Draghi's view on fiscal stimulus. Euro zone central bank sources told Reuters the market had overinterpreted Draghi's comments on Tuesday that the ECB is ready to start withdrawing the emergency stimulus for the economy.

The sources, however, clarified that he intended to signal tolerance for a period of weaker inflation, not an imminent policy tightening.

The technology index has risen about 17 percent since the start of the year, making it the best performing sector among major S&P sectors.

However, investors, concerned with the sector's lofty valuations, have been shifting to defensive sectors.

Equity valuations have come under focus at a time when inflation remains low, recent economic data has been tepid and President Donald Trump's pro-growth policies face delays. The S&P 500 is trading at nearly 18 times forward earnings estimates, well above its long-term average of 15 times.

Federal Reserve Chair Janet Yellen said on Tuesday the central bank would continue raising rates gradually and that by standard metrics, some asset valuations look high.

Fed Vice Chair Stanley Fischer warned the central bank must remain vigilant in monitoring financial stability risks.

San Francisco Fed head John Williams said investors may be getting overly complacent about risks and that "the stock market seems to be running pretty much on fumes."

A planned vote on Republican healthcare bill to dismantle the Affordable Care Act was put off to after the Senate's July 4 recess.

The healthcare legislation, which has encountered resistance from several Republicans, is the first plank of President Donald Trump's domestic policy agenda, with investors eager for him to move onto his other plans, including tax cuts, infrastructure spending and deregulation.

Trump's promises of a pro-growth agenda is partly behind the S&P's 13 percent rise since the Nov. 8 election.

"A setback for health reform could put in question tax reform this year unraveling the 'Hope Rally'", Peter Cardillo, chief market economist at First Standard Financial.

Dow e-minis were up 35 points, or 0.16 percent, with 37,613 contracts changing hands at 8:40 a.m. ET (1240 GMT).

&P 500 e-minis were up 5.5 points, or 0.23 percent, with 259,971 contracts traded.

Nasdaq 100 e-minis were up 11 points, or 0.19 percent, on volume of 72,754 contracts.

Oil edged lower towards $47 a barrel after an industry report said U.S. inventories increased, reviving concerns that a three-year supply glut is far from over.

The market was also gauging the impact of a global ransomware attack that disrupted computers at banks and large companies.

Spectranetics jumped 26.6 percent to $38.50 after Dutch healthcare company Philips agreed to buy the company for $2.16 billion.

KB Home edged up 0.5 percent to $22.93 after the homebuilder increased its full-year forecast. (Reporting by Tanya Agrawal; Editing by Arun Koyyur)

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