Tuesday Look Ahead: Changing of the Guards
CNBC Executive News Editor
A high degree of uncertainty surrounded the stock market's unsettled, back and forth trade Monday. That mood of indecision could pervade Tuesday's session though there will be plenty of news for investors to watch, including a special appearance by Treasury Secretary Hank Paulson during the 8 a.m. ET hour of CNBC's "Squawk Box."
Monday's late-breaking corporate stories could also be a feature Tuesday. After the bell, Starbucks said its Chairman and founder Howard Schultz is taking back the CEO job, succeeding Jim Donald. The move comes on a day that the Wall Street Journal featured in a front page story the aggressive campaign by fast food powerhouse McDonald's to move into the coffee market. That assault is sure to dent Starbucks already wounded stock price. (When stocks flounder, call back the founder.)
Another CEO on the move is Bear Stearns' Jimmy Cayne. CNBC's Charles Gasparino is reporting that Cayne will give up the CEO titlebut remain Chairman. President Alan Schwartz takes on the role of CEO. Wall Street has been buzzing about Cayne's future since Bear Stearns hedge funds imploded in the subprime mortgage mess this past summer.
Tuesday is a big day for corporate news, with more events at the Consumer Electronics Show in Las Vegas, and another host of pharmaceutical and biotech companies speaking at the J.P. Morgan health care conference in San Francisco. There is some data expected, including pending home sales at 10 a.m. and the NFIB small business survey, reported at 7:30 a.m. Consumer credit is due at 3 p.m.
But perhaps one of the most interesting hours of the day will be that 8 a.m. hour of "Squawk Box." CNBC's senior economic correspondent Steve Liesman will join the Squawk Box anchor team for the interview. Paulson, in his first interview of the New Year, will speak exclusively with CNBC about the economy, the mortgage mess, geopolitical events and the capital markets. He will be joined for part of the program by Martin Feldstein, President and CEO of the National Bureau of Economic Research, the organization known for calling recessions.
What's Unsettling Markets
What's Unsettling Markets
The Dow, in a weak showing, closed 27 points higher Monday, at 12,827. The Nasdaq was 5.19 lower at 2499, and the S&P was up 4.55 points to 1416.
The biggest cause of unease in the market is the economy, and the debate rages whether the U.S. is heading for a recession or not. On Monday, traders balanced those concerns with optimism the Fed would be more aggressive with rate cuts when, or even before, it meets at the end of the month. Within hours of Friday's weak jobs data, several Wall Street economists forecast the Fed would now trim a half-point from the target Fed funds rate to head off a slowdown. That view is quickly becoming the consensus as several more firms joined them today.
Paulson spoke on the economy and capital markets Monday, saying there's no easy solution to the housing crisis. He raised the possibility that a "systematic" approach may be needed to help homeowners with other types of adjustable mortgages, even beyond the current Administration plan for subprime loans. Paulson also said President Bush has not yet decided whether to introduce a stimulus package to help the economy.
Another catalyst for unease is the uncertainty surrounding the presidential election. As primary season gets underway, the front runners of both parties have fallen behind, forcing investors to reexamine the views of all candidates. Tuesday's New Hampshire primary will be watched closely.
Then there's geopolitical unease. Actions by Iran over the weekend unsettled markets. Buying in Treasurys pushed yields on the 10-year lower to 3.839 percent. Oil is usually the barometer for queasiness surrounding the Middle East but Monday its price moved lower on worries about the economy. Oil finished the day at $95.09, off 2.9 percent on the day.
And then there's earnings season on the horizon. Wednesday starts the fourth quarter reporting season with Dow component Alcoa's after the bell earnings report. K.B. Home, Family Dollar Stores and Constellation Brands all report on Tuesday.
After the bell Monday, Circuit City said its same store sales fell 11.4 percent in December. The company continues to expect a fourth quarter loss. Other chain stores are expected to report December sales Thursday. Circuit City's results were expected to be on the weak side.
Here's a look at Tuesday's data. (All times Eastern)
7:30 a.m.: ET: Dec. NFIB Survey, estimate N/A
10 a.m.: Nov. Pending Home Sales, consensus 0.0 percent vs 0.6 percent prior
3 p.m.: Nov. Consumer Credit, consensus $8B vs $4.7B prior
Questions? Comments? email@example.com