US stocks look to open higher Tuesday
Traders are cheered European markets were steady after Friday's downgrades of France and 8 other countries. Carnival shares hit on cruise-ship disaster. China's 4th-quarter growth slips. Citigroup and Wells Fargo report before the open.
U.S. stocks look to open higher on Tuesday after markets in Europe weathered Friday's downgrades of debt of nine European nations by ratings agency Standard & Poor's and China reported better-than-expected fourth-quarter growth.
Stocks in Germany, France and Britain closed higher on Monday. Italy's FTSE MIB Index ($IT:FTSEMIB) jumped 1.4%.
Futures trading suggests the Dow Jones industrials ($INDU) could open 60 points higher Tuesday with the Standard & Poor's 500 Index ($INX) up six points and the Nasdaq-100 Index ($NDX) up 16 points.
U.S. Markets were closed Monday for the Martin Luther King holiday. Electronic trading for many commodities continued, however, and old (-GC), silver (-SI) and and crude oil (-CL) were higher.
The potential of a decent open Tuesday comes despite another S&P downgrade. Late Monday, S&P downgraded the European Financial Stability Facility, the European rescue fund, from AAA to AA+. The agency said it could downgrade the fund further if the creditworthiness of member states deteriorates further. Worries about Greece built as the Greek government and bond investors tried to restart talks about restructuring the nation's huge debt.
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For U.S. markets, Tuesday starts a week heavy in earnings, starting with Citigroup (C) and Wells Fargo (WFC) and ending Friday with General Electric (GE) and Schlumberger (SLB).
Also reporting this week are Bank of America (BAC), Goldman Sachs (GS), Intel (INTC), Google (GOOG), IBM (IBM) and Microsoft (MSFT), the publisher of MSN Money.
The key U.S. economic report on Tuesday will be the Empire Manufacturing Index, published by the Federal Reserve Bank of New York.
The week also includes a second look at regional manufacturing from the Philadelphia Federal Reserve Ban and reports on U.S. industrial production, producer and consumer prices, housing starts and building permits.
Cruise accident slams Carnival shares
Carnival (CCL) shares fell 17.6% in London Monday following the capsizing of its Costa Concordia cruise ship along the Tuscany coast of Italy on Friday.
The company said the hit on 2012 earnings for the loss of use will be $85 million to $95 million, or 11 cents to 12 cents a share. The company will also suffer further undetermined costs. The accident caused at least six deaths and hundreds of injuries.
Sixteen people are unaccounted for, including two Americans.
Can China now cut rates?
China reported early Tuesday local time that its economy grew at an 8.9% in the fourth quarter from a year ago. That was better than expected. But it was down from a 9.1% growth rate in the fourth quarter of 2010 and the lowest growth rate since mid-2009.
The growth rate was the first below 9% since mid-2009, Bloomberg News noted, and may be low enough for Chinese regulators to be willing to loosen monetary purse strings.
China's government has been trying to reduce inflationary pressures, but lately, there have been signs that China's red-hot property markets were softening sharply. Construction has been tailing off, and there have been increasing calls for infrastructure spending.
Industrial production, however, increased 12.8% in December from a year earlier, Bloomberg said, up from 12.3% in November.
China's Shanghai Composite Index was up modestly in early Tuesday trading after falling 38 points on Monday.
The Shanghai index had fallen 21.7% in 2011 as worries built first that an inflation bubble was building and then that the property market was crashing. Through Monday, the index was up 0.3% this month.
Europe sees modest gains, but Greece is an issue
Germany's Xetra Dax Index ($DE:DAX) finished Monday with an 81-point gain to 6,224. Britain's FTSE-100 Index Index ($GB:UKX) rose 24 points to 5,660, and France's CAC-40 Index ($FR:PX1) added 28 points to 3,1225.
The gains came after the markets opened lower. But traders were cheered when France was able to sell $11 billion in Treasury bills, paying slightly lower yields than a week ago.
European markets had steadied last week after decent bond auctions in Italy and Spain last week. But the consensus view of European stock markets is that they are vulnerable to sudden shocks, especially with the potential of a Greek default on its debt coming in late March.
And Greece has emerged yet again as the big worry. The Greek government sent senior officials to Washington Monday to meet with the International Monetary Fund as it raced against the clock to break a deadlock in debt-swap talks that has raised fears of an unruly default.
Cash-strapped Athens needs a deal with the private sector within days to avoid going bankrupt when 14.5 billion euros of bond redemptions fall due in late March.
Crude oil and gold move higher
Light sweet crude oil was trading at $99.68 on Monday, up 98 cents. So far in January, crude is up 1% after rising 8.2% in 2011.
Gold was at $1,643.70 an ounce, up $12.90 from Friday. The gain probably reflects uncertainty over Europe and rising tensions in the Persian Gulf.
The dollar was flat against major currencies.
A nice start for 2012
U.S. stocks have begun the year with a nice rally. The Dow is up 1.7% for the month, with the S&P 500 up 2.5% and the Nasdaq up 4.1%. The Nasdaq-100 Index ($NDX) is up 4.13%.
Materials, homebuilding and financial stocks have been the best performers this month. A total of 355 S&P 500 stocks are higher in January, along with 22 Dow stocks and 78 Nasdaq-100 stocks.
The gains reflect optimism that the economy gained strength in recent months and may continue to grow in 2012. The economy appeared to slow appreciably in the second and third quarters of 2011. The slowdown was partly due to disruptions caused by higher oil prices, the March earthquake in Japan and political squabbles at home.
Netflix (NFLX), homebuilder PulteGroup (PHM), fertilizer producer CF Industrials (CF) and Bank of America are the top January performers among S&P 500 stocks. Netflix is up 36.2%, with Pulte, CF and Bank of America up 20.8%, 19% and 18.8%, respectively.
Bank of America, Alcoa (AA), up 13.3%; Caterpillar (CAT), up 13.1%; and Microsoft, up 8.8%, are the top Dow performers,
At the same time, General Motors (GM) and Ford Motor (F) are up 19.8% and 11.9%, respectively.
Netflix, hard-drive maker Seagate Technology (STX) and Life Technologies are the Nasdaq-100 leaders. Apple (AAPL) is up 3.7%, with Google (GOOG) down 3.2% and Amazon.com (AMZN) up 3.1%.
Seventeen of 20 stocks in the Dow Jones Transportation Average ($DJT) are higher, led by Overseas Shipholding (OSG), Delta Air Lines (DAL), railroad operator CSX (CSX) and package shipper FedEx (FDX).
The index, often seen as a good leading indicator, is up 3.1%. That comes after a 1.7% loss for 2011 but a 19.8% gain in the fourth quarter.
Think about it for a minute... The US owes 3 times what Europe does. It has less debt per taxpayer. It's budgets are in much better shape than the USA.
The USA's deficit has increased each of the last 3 years, and revenue has as well. The debt is approaching 16 trillion, and the deficits are getting worse. We have not paid off a dime in debt in 60 years. All in all, we are a Greece waiting to happen. The only difference is we can PRINT worthless dollars to pay off our debt.
I would sell any government debt I had. If you continue to hold it you will take a democrat 'Haircut'
Why take the risk?
One sure fire way to tell if a politician is lying.
They are breathing and their lips are moving!!!!!
The fact we dont have any tell you how it really is people in Washington is going to lead to a depression. The US debt is downgraded so the market is up. WHAT!? Europe has 8 countries debt downgraded and the European markets and US markets will be up. WHAT!? Alcoa loses money and the stock is up. WHAT!?
Am I the only one that sees a bunch of continuous problems building that everyone is ignoring and nobody is dealing with? When all this comes crashing down its gonna hit hard and fast. Its just a matter of time.
I didn't vote for the last two, but I certainly know who was the dumbest and stupidest of all time...
And puhhhhleeeeeze don't tell me about his business acumen, nor his education...
Let alone his so-called questionable military career.
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