Markets can't help but remain caught in the latest cross currents of news from Europe, but the question is whether it's going to feel like high or low tide.
Stocks got a bit of both on Monday. Initially, the market sold off sharply on a negative flood of headlines from Europe over the weekend, including that German officials were discussing the prospect of a Greek default and that Moody's could downgrade French banks. But by late in the session, stocks rallied back to finish higher after a Financial Times story said Italian officials were talking to China Investment Corp about "significant" purchases of Italian bonds and strategic investments in Italian companies.
Tuesday's focus will be on a 7 billion euro Italian bond auction early in the day, and then shift to U.S. markets, where the U.S. Treasury is auctioning $21 billion in 10-year notes at 1 p.m. Data includes the 8:30 a.m. ET release of import prices and the 2 p.m. release on August's federal budget. The NFIB small business survey is released at 7:30 a.m. ET. Best Buy reports earnings ahead of the open.
Stock market sentiment has grown particularly gloomy, which some strategists see as a positive. As the negative news kicks up from Europe, traders have been watching technical levels to see whether stocks will retest August lows. The S&P 500 dipped below the key 1140 support level briefly Monday, but then rebounded to close 8 points higher at 1162. The Dow was up 68 at 11,061.