Daytrading September 22 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Stocks are set for a positive open after Wall Street rebounded from a two-day sell-off as Federal Reserve officials reassured investors that the economy is strong enough to weather a rate hike.

The December SPI200 futures contract rallied 29 points or 0.6% to 5089 as a choppy session in the US ended with  shallow gains.

The S&P 500 closed nine points or 0.46% ahead, less than half its initial rise after briefly shedding all of its advance as biotechs suffered their worst night of the year. The Dow put on 126 points or 0.77% and the biotech-heavy Nasdaq less than two points or 0.04%.

The market peaked early in the session as the Fed rolled out four officials to talk up the domestic economy and the likelihood that the central bank will raise the federal funds rate before the end of the year. Officials appeared keen to dispel the idea growing in trading circles that last week's hold means no rate rise until 2016. Last week's decision to leave rates on hold was an exercise in "risk management", according to Atlanta Fed President Dennis Lockhart, who said he still expects the Fed to raise this year. Saint Louis Fed President James Bullard, who did not have a vote last Thursday, said he would have dissented.

“There are a lot of Fed people coming out and trying to be transparent following last week’s sell-off, but in some cases that’s leading to more investor confusion,” Richard Sichel, chief investment officer at Philadelphia Trust in the US, told Bloomberg. “There are so many brilliant people talking every day that it’s difficult to sort it all out. There’s still a tremendous amount of nervousness.”

The major indices plunged mid-session as a growing controversy about the pricing of medicines flared into a panic sell-off in biotechs and health stocks. The trigger was a tweet from Democrat presidential hopeful Hilary Clinton in response to a New York Times article about a 62-year-old drug raised from US$13.50 to US$750 a tablet overnight. Clinton's tweet said: "Price gouging like this in the specialty drug market is outrageous. Tomorrow I'll lay out a plan to take it on." Read more here and here.

The iShares Nasdaq Biotechnology ETF tumbled 4.48%, the fund's largest loss since December. Retrophin, the company that owns the drug singled out in the Times article, skidded 12.15%. The selling extended to blue chips such as Pfizer, Merck and Johnson & Johnson as the fear of greater regulation briefly sent the S&P 500 health industry group down 2% before a partial recovery to a loss of roughly 1%.

Financials and IT were the pick of the sectors. The energy ETF rallied 0.57% as crude oil recouped most of Friday's loss. West Texas Intermediate crude for October delivery settled $2, or 4.5%. ahead at US$46.68 a barrel.

A rebound in the US dollar capped interest in gold. The NYSE Arca Gold Bugs index retreated 3.21% after gold for December delivery declined $5 or 0.4% to settle at US$1,132.80 an ounce. The US dollar index extended Friday's rebound from a three-and-a-half-week low, lately up 0.68%.

Yesterday's steep decline on the ASX helped drag BHP down 1.3% and Rio Tinto 0.56% in US trade. Iron ore for immediate delivery to Tianjin in China was unchanged yesterday at US$57.10 a tonne.

Copper bounced 0.3% from Friday's two-week low in London trade. London aluminium dipped 0.5%, tin 0.1% and zinc 1.8%. Lead rose 0.7% and nickel 1.6%. US copper for December delivery was recently flat at US$2.39 a pound.

A clear win for Syriza in Greece's weekend election helped European markets recover from their heaviest loss in two weeks. The Stoxx Europe 600 bounced 0.86%, Germany's DAX 0.33%, France's CAC 1.09% and Britain's FTSE 0.08%.

The dollar was this morning buying 71.33 US cents.

TRADING THEMES TODAY

ROLLER-COASTER TILTS UP: No relief yet from this period of extraordinary volatility. Even the nights when the headline move on Wall Street is minimal conceal big underlying swings. The major indices were all over the place last night, but the positive close is what matters here after the ASX took another heavy spanking yesterday. While the recent trend in the US is towards cautious recovery, the XJO can't kick clear of this support level and looks increasingly intent on breaking down. Each rebound has been shallower than the last. We really need a 'higher high' in the next week or two to have any confidence that we're not going south through 5000. Today, however, there should be enough fuel in the tank for another shallow bounce.

ECONOMIC NEWS: The quarterly house price index is due at 11.30am EST. Trading in Japan remains suspended for a public holiday. Tonight's US highlights are the Richmond Manufacturing Index, house price index and a speech by a Fed official.

Good luck to all.