Inflation data and some retailers' earnings are the big headlines ahead of Tuesday's opening bell.
Home Depot , Target and Macy's all report early in the day. The producer price index is due at 8:30 a.m., and traders will be watching to see whether it shows the same trend as the consumer price index last week - an unexpected pickup in inflation. Home price data is released by Case Shiller and also by OFHEO which issues a fourth quarter price index at 10 a.m.
Stocks rallied on Monday after another positive piece of news in the bond insurance saga. Standard and Poor's affirmed triple A ratings for MBIA and Ambac though it kept Ambac on watch as it continues to work to shore up its capital. MBIA, after the close, said it was eliminating its dividend in order to preserve capital.
Investor Wilbur Ross, who is developing his own plan for bond insurers, says the S&P move shows a measured pace on the part of rating agencies. "We would hope within the next week or so to have an announcement on what we'll actually be doing," he said of his own plan on Monday's "Closing Bell."
"I do think we are getting to the point in time where those companies are going to get sorted out," said Ross. "I think what's going on perhaps is you will have a smaller number of companies but stronger ones that will be in the picture going forward."
Stocks made another big move up Monday, after S&P released its ratings news. Shares of Ambac and MBIA both jumped higher. The Dow closed up 1.5 percent, or 189 points, and the Nasdaq was up 1 percent, or 24 points. The S&P 400 gained 18 or 1.4 percent.
"This is the new version of the ratings game. Instead of bachelors and bachelorettes, you have rating agencies and insurers," said UBS director of floor operations Art Cashin in a phone interview just after the S&P action.
"On an empty playing field, anyone can score a touch-down and I think that's what you're seeing" in this market. He said in the thin trade seems to have exaggerated the market's move when the S&P news crossed.
Financial markets have been fretting about the possible downgrade of bond insurers because of the potential ripple effect. Bond insurers insure the municipal bond market and the threat of downgrades there has crippled the short end of that market. They also hold portfolios containing CDOs and other liabilities that Wall Street fears could directly impact banks if their ratings are slashed.
This drama promises to stay center stage until its clear the companies can find sufficient capital.
On Tuesday, Federal Reserve Vice Chairman Donald Kohn speaks on the economy and monetary policy at the University of North Carolina at 12:15 p.m. He will take questions from the audience.
Cashin said even with the run up in stocks, activity could be fairly muted ahead of two days of testimony from Fed Chairman Ben Bernanke later in the week. Bernanke testifies on the economy before two Congressional committees Wednesday and Thursday.
Oil closed at $99.23 per barrel, up $0.42. Gasoline rose 0.3 percent to $2.5419 per gallon, and heating oil rose 0.8 percent to $2.27853 per gallon. Natural gas rose 0.4 percent to $9.8186 per btu. Wheat and soy beans again raced higher, but gold slipped $7.10 per troy ounce to $937.60 after a Treasury official said the administration favors a plan for the International Monetary Fund to sell some of its gold.
In other earnings news CBS , Heinz , Vornado , Sirius Satellite and Tenet Helathcare report Tuesday. Also reporting are Frontier Oil , Foster Wheeler and AutoZone . Autodesk and Sotheby's report after the bell.
Sign of the Times
Cambridge Energy Research Chairman Dan Yergin tells us green is on the minds of governors, who attended the National Governors Association winter meeting these past couple of days in Washington. He says the group's focus was clearly on the the type of spending that might be coming for clean energy in the next Administration.
Yergin, CNBC Global Energy analyst, was one of the keynoters at the meeting. He sent us the following note, which shows like most things in this presidential election year, "green" has become a highly charged political topic.
Here are his comments:
"It tells you a lot about where the politics are going that, in this election year, midst all the economic issues, the theme of the meeting this year is all about clean and green energy. The states are really out to be the "laboratories of democracy," pushing ahead of the federal government in terms of mandates and regulations and incentives -- though not taxes. The governors even announced a partnership with Wal-Mart, which will provide free energy audits for the state capital complexes.
There's no obvious party-line on this issue. The NGA chairman, Republican Governor Tim Pawlenty, who is said to be on the McCain vice-presidential short-list and who will be the host governor for the Republican convention in Minneapolis, told me after our session that they're going to go out of their way to deliver a 'green convention.' Expect to see a lot of hybrids at the Republican convention -- and a lot of ethanol, as Minnesota requires 20 percent ethanol in its gasoline by 2013.
Ohio's Democratic governor Ted Strickland, who is said to be on both Obama's and Clinton's vice presidential short lists, summed up what you heard from a number of governors when he said that "clean green energy" is 'no longer a tie-dyed T-shirt kind of idea' but is now 'mainstream economics'."
The following data is expected on Tuesday. All times are eastern.
0830 Producer Price Index, expected +0.4 percent
0830 PPI, Ex food and energy, expected +0.2 percent
1000 Consumer confidence, expected 81.0
1000 Richmond Fed Survey