Stocks Firmer After Rout
Stocks rose early Tuesday as traders sought bargains in the previous session's debris.
Index futures recently showed the
S&P 500
trading 5 points above fair value, while the Nasdaq 100 was set for a 6-point rise. The 10-year Treasury bond was down 2/32 in price to yield 5.03%, while the dollar rose against the yen and euro.
On Monday, stern talk from
Federal Reserve
Chairman Ben Bernanke sent stocks to their second rout in less than a week. The
Dow Jones Industrial Average
tumbled 199 points, or 1.8%, to 11,049, with every component but
Disney
(DIS) - Get Report
ending lower. The selling was similar on the S&P 500 and worse on the
Nasdaq.
"While monthly inflation data are volatile, core inflation measured over the past three to six months has reached a level that, if sustained, would be at or above the upper end of the range that many economists, including myself, would consider consistent with price stability and the promotion of maximum long-run growth," Bernanke said. The comments raised the likelihood of a June 29 rate hike to roughly 76%, going by fed funds futures.
Overseas markets followed New York lower, with London's FTSE 100 recently down 1.1% to 5701 and Germany's Xetra DAX off 1% to 5567. In Asia, Japan's Nikkei plunged 1.8% overnight, while Hong Kong's Hang Seng slipped 0.3% to 15,973.
Commodity prices were mixed Tuesday, with front-month crude gaining 9 cents to $72.69 a barrel. Gold fell $9.90 to $638.80, copper fell 11 cents to $3.50 a pound, and silver futures lost 4 cents to $11.94 an ounce.
The situation for stocks is nearly identical to that of
last Wednesday, with traders returning to the scene of a nearly 200-point Dow pummeling spawned in part by hawkish comments by a Fed official. In that case, the averages quickly made up the lost ground in the two subsequent sessions.
To view Ana Dane's video take on today's premarket action, click here
.
Still, trading has been extremely volatile since the last Fed statement, which indicated more tightening could be needed to keep inflation in check. Over those 17 trading days, the Dow has suffered three one-day declines of 180 points or more and had seven sessions in which it moved by at least 90 points.
In corporate news Tuesday,
Nortel
(NT)
said its first-quarter loss widened by 61% to $167 million while revenue was unchanged at $2.38 billion. Nortel said margins slipped in mobility, core networks and other segments.
(GOOG) - Get Report
will unveil a Web-based spreadsheet program Tuesday intended to compete with
Microsoft's
Excel program. A Google representative says the product is still early in development and will be available on a test basis for now.
General Motors
(GM) - Get Report
CEO Rick Wagoner said his company would be positioned to step up its investment in technology and better compete globally if the company's buyout offer to employees meets with quick success. In an interview with the
Financial Times
, Wagoner stopped short of confirming reports that acceptance of the buyouts is running ahead of forecasts.
CA
(CA) - Get Report
is saying goodbye to another top executive. Global sales chief Gregory Corgan is stepping down amid a snafu involving commission payments that caused the software maker to lower guidance last week. In the past month, the former Computer Associates has lost its CFO, its chief operating officer and its chief technology officer.
In ratings news, Piper Jaffray raised
Monster Worldwide
(MNST) - Get Report
to outperform from market perform, while Prudential upped
International Paper
(IP) - Get Report
to neutral from underweight.
