CNBC's Domm: Today's Agenda in the Markets

Wall Street is signaling a higher open this morning as merger activity continues to be a major catalyst for stocks. Europe's stock markets are moving higher this morning, and Asian stocks finished mostly higher.

The S&P 500 see-sawed on both sides of 1,527 yesterday, before ending the day down a sluggish 0.98 point, 3.34 points beneath its March, 2000 record. The Dow finished off nearly three points and the Nasdaq, again defying the trend, rose nine points. The Dow's drop marked its first two day decline since March.

Gasoline Price Cut?

Gas prices, at record levels at the pump, suffered the biggest one day percent decline since Jan. 16 in the futures market yesterday. Gasoline for June delivery fell 9.50 cents, off 4%. Crude oil slumped $1.30 per barrel, or 2% to $64.97, stalling a three-day advance. Oil and gasoline inventory data is reported this morning, and prices are slightly lower this morning.

"It could be a substantial build in gasoline, particularly with what we're seeing in the cash market and the Colonial Pipeline being beyond allocation. There's more product than can be shipped on it," says CNBC contributor John Kilduff, senior vice president at Man Financial. Kilduff says the spot market for gasoline yesterday saw an unusual decline.

"It was down 24 cents in the Gulf Coast cash market at one point," he said. "(T)he Merc (NYMEX futures price) was down almost 10 cents a gallon. I've never seen the cash collapse like that ... It looks like it could come cratering lower."

Bond Buzz

Another market we're watching closely today is the bond market, and who better to ask about the bond market than our stock guy Bob Pisani, who carefully watches all things that impact the stock market from his booth at the NYSE?

Yesterday, yields on the 10-year hit levels not seen since February, and Pisani says that got stock traders talking. "It's the biggest worry down here," says Pisani.

"When stock traders start talking about bond yields, pay attention to the bond market," he says. The yield on the 10-year yesterday was at 4.830%.

"Bond yields are going up all over the world, simply because people are buying stocks," says our Bob Pisani. "Anything that makes money more expensive is potentially a problem for the market." China's plan to widen the trading range of the yuan could also be a factor in the creeping yield trend too as China is expected to invest less in dollars.

Pisani says that despite the wary eye on bonds, the stock market is in fairly good shape and traders are showing a healthy amount of skepticism. For instance, shorts on the NYSE are at record levels. Two broad indices, Dow Jones Wilshire 5000 and the Russell 2000 set new closing highs yesterday.

Heavy Metals

Canada's Alcan rebuffed Alcoa's $27 billion takeover offer late yesterday and said the price was insufficient and not in the best interest of its shareholders. Toronto's Globe and Mail, meanwhile, reports that BHP Billiton is an interested buyer of Alcan and is in early stage talks.

In another ongoing saga, Dow Jones controlling Bancroft family is scheduled to meet privately today to discuss the News Corp bid, according to two published reports. And Stride Rite struck a deal to be acquired by Payless for $800 million.

In other corporate news, Target reported fiscal first-quarter earnings of 75 cents a share, beating market expectations. But sales of $14.04 billion were light. And Reuters reports Merrill Lynch is expected to announce a major restructuring.