Futures Mixed After Tax Rally Fades
U.S. stock index futures continued to struggle for directions as investors awaited more direction on a compromise reached between President Barack Obama and the Republicans on extending Bush-era tax cuts.
Stocks ended mixedon Tuesday after a rally sparked by the tax cut compromise faded amid news that Federal officials were pursuing more companies in an insider trading probe.
Yields on Treasurys surged Tuesday as the proposed extension of tax cuts sparked fears of inflation, but one analyst told CNBC the rise in yields suggested investor sentiment remained buoyant as it may be seen as a sign that the economy is growing.
"I think it's also telling us that the world economy is recovering, there's a recovery underway," Chris Watling, managing director at Longview Economics, told CNBC when discussing the yield.
An auction of $21 billion in reopened 10-year Treasurys will take place at 1 p.m.
The prices of oil and gold fell from their recent highs, which dragged on the futures along with the likely profit taking from Tuesday's gains, Yusuf Heusen, senior sales trader at IG Index, told CNBC.com.
Market sentiment would likely see improvement as the session progressed, sending stocks higher because the economic fundamentals are quite positive, Heusen said.
European shares were higher, but with modest gains after German export data came in weaker than expected, while the country's imports rose to a record high in October. Asian stocks closed mostly in the red with the South Korean Kospi index falling after North Korea fired artillery into its own waters.
In other news, Costco Wholesale released stronger-than-expected quarterly profit results. The retailer said revenue and traffic saw improvement at its U.S. stores, with the relatively weak dollar helping sales in other countries.
And Home Depot raised its outlook for 2010sales and profits for the second time as homeowners slowly return to renovation projects.
But McDonald's reported a smaller-than-expected rise in same-store global salesin November, as demand weakened in the U.S. and Japan.
On the housing front, the Wall Street Journal reported that Fannie Mae and Freddie Mac are in discussions with officials over government programs intended to help home owners who owe more than the values of their homes.
And applications for U.S. residential mortgages fell 0.9 percent to 603.5 for the week ended Dec. 3, as refinancings slipped by 1.4 percent, according to the Mortgage Bankers Association. Loan requests for home purchases rose for a third straight week by 1.8 percent to 210.9.
On Tap This Week:
WEDNESDAY: Quarterly services survey, 10-year Treasury note auction.
THURSDAY: BOE announcement, jobless claims, wholesale inventories, 30-year Treasury bond auction, DuPont investor day; before-the-bell earnings from Costco and Lululemon Athletica; after-the-bell earnings from National Semi
FRIDAY: International trade, import and export prices, consumer sentiment, and Treasury budget
More From CNBC.com: