Futures Gain; Europe to Approve Greece Aid
Futures edged higher Tuesday after an Italian bond auction which saw record yields but sold close to the top end of its targeted range, and ahead of another meeting of euro zone finance ministers under pressure to solve the debt crisis.
Stocks rallied on Monday but after Monday’s closing bell rating agency Fitch gave the United States until 2013 to come up with a “credible plan” to address its budget deficit or risk losing its AAA rating.
Possible rating agency downgrades pressured stocks in Europe in Tuesday morning trade.
French newspaper La Tribune reported Standard & Poor’s could cut its France’s AAA rating outlook within days, while Moody’s said it could downgrade the subordinated debt of 87 banks across 15 countries on fears that governments will not be able to bail them out.
Euro zone ministers are expected to approve the sixth tranche of aid for Greece as well as find a deal on leveraging the euro zone’s rescue fund. They will also be preparing for next week’s heavily-anticipated summit of EU heads of state.
Meanwhile Italy paid more than 7 percent to sell three and 10-year paper on Tuesday in an auction that saw decent demand for the shorter-maturity debt.
"It is certainly not as bad as the disaster in Germany where they failed to sell the 10-year," Nick Parsons, Head of Strategy at National Australia Bank said.
“Italy has got a couple of quarters at least that it could fund at these levels if it needed to…Clearly the message coming from the wider euro zone has to be that Italy is in some ways looking like it is taking its medicine and we would expect to see the ECB provide some relief,” David Page, economist with Lloyds Bank Corporate Markets told CNBC said ahead of the auction.
On the economic front, price of U.S. single-family home slipped 0.6 percent in September, according to the S&P/Case Shiller composite index of 20 metropolitan areas. Economists surveyed by a Reuters poll had expected no change.
American Airlines and its parent company AMR filed for bankruptcy protection after the company wasn't able to come up with an agreement with pilots to pare its labor costs. The airline also said it was suffering from soaring fuel prices.
A federal judge threw out Citigroup’s proposed $285 million settlement over the sale of toxic mortgage debt in a decision which throws into question the SEC's policies toward settlements with publicly traded companies.
Among earnings, Tiffany slumped after the luxury retailer gave a holiday quarter profit outlook that missed expectations.
Meanwhile, Amazon.com said it saw a surge in sales of its Kindle devices, helped by its new Kindle Fire tablet, on the crucial "Black Friday" shopping day after Thanksgiving.
Facebook is preparing for an IPO next yearand is explporing to raise $10 billion, according to the Wall Street Journal.
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On Tap This Week:
TUESDAY: Consumer confidence, FHFA home price index, Fed's Kocherlakota speaks, Fed's Yellen speaks
WEDNESDAY: Weekly mortgage applications, Challenger job-cut report, ADP employment report, productivity & costs, Chicago PMI, pending home sales index, oil inventories, Beige Book, farm prices, AT&T/TMobile hearing, USDA's agricultural trade outlook; Earnings from American Eagle, Aeropostale
THURSDAY: Jobless claims, ISM mfg index, construction spending, chain store sales, auto sales; Earnings from Barnes & Noble, Kroger, Lululemon, H&R Block
FRIDAY: Employment situation, Fed's Plosser speaks; Earnings from Big Lots