Stocks fell early Tuesday as traders tried to translate Federal Reserve Chairman Ben Bernanke's ruminations on interest-rate variability. Index futures recently showed the S&P 500 trading about 2 points below fair value, while the Nasdaq 100 was set for a 5-point decline. The 10-year Treasury bond was down 4/32 in price to yield 4.67%, while the dollar rose against the yen and euro. In a speech Monday, Bernanke, who took over for Alan Greenspan Jan. 31, said growth prospects for the U.S. economy remain favorable and that low long-term interest rates aren't necessarily a harbinger of recession. Bond and currency traders took the remarks as confirmation that the Fed plans one and perhaps two more quarter-point hikes. Bernanke spent much of his speech taling about how best to determine a "neutral" rate policy. The ex-academic offered two possible explanations for the narrow yield curve: one, a global "savings glut" that would require less Fed effort to combat; and two, a shortage of long-term bonds that would require more vigilance. "I would not interpret the currently very flat yield curve as indicating a significant economic slowdown to come," Bernanke said. "In previous episodes when an inverted yield curve was followed by recession, the level of interest rates was quite high, consistent with considerable financial restraint. This time, both short- and long-term interest rates -- in nominal and real terms -- are relatively low by historical standards." Bernanke's confidence about the economy has been shared by investors of late. Over the last seven sessions, the Dow Jones Industrial Average has risen 198 points, or 1.8%, while the S&P 500 is up 33 points, or 2.6%, and the Nasdaq Composite has added 64 points, or 2.8%. Oil was lower Tuesday after plunging almost 4% in the previous session. Optimism about another strong reading on U.S. storage inventories helped spur the weakness. In electronic Nymex trading, April crude was down 25 cents to $60.17 a barrel. To view David Peltier's video take on today's premarket action,
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Overseas markets were mixed, with London's FTSE 100 recently losing 0.3% to 5975 and Germany's Xetra DAX down 0.6% to 5869. In Asia, Japan's Nikkei rose 1.7% overnight to 16,625, while Hong Kong's Hang Seng slipped 0.1% to 15,922. At 8:30 a.m. EST, the Labor Department releases the producer price index for February. The government's main gauge of wholesale inflation is expected to show a rise of 0.2%, or 0.1% excluding food and energy. After the bell, Nike ( NKE) is expected to say it earned $1.10 a share on sales of $3.51 billion in its third quarter. Oracle ( ORCL) traded lower despite saying third-quarter earnings rose 42% to $765 million, or 14 cents a share, on an 18% rise in sales to $3.47 billion. Adjusted earnings of 19 cents a share beat estimates by a penny. New database license revenue, Oracle's core business rose 4% to $827 million -- well below Wall Street's expectations of growth of 9% to $853 million. The appreciation of the dollar hurt sales by roughly 4 percentage points; without the currency effect, database sales would have grown by roughly 8%, Oracle said. Jostling continues around Wendy's ( WEN) planned initial public offering of Tim Hortons. On Monday, the doughnut chain raised the expected price of the deal to $22 to $24 a share, from $18 to $20 a share previously. The Hortons transaction follows a very well received IPO last month by McDonald's ( MCD) Chipotle ( CMG). Google's ( GOOG) next major foray will be into financial news, according to published reports Tuesday. The search engine giant is readying a stock-price and news portal that could threaten the hegemony of the sector's dominant players, including Yahoo! ( YHOO) and Microsoft ( MSFT), the Wall Street Journal says. In early research, Electronic Arts ( ERTS) was upgraded to buy at Merrill Lynch; Nvidia ( NVDA) was raised to overweight at Lehman; and Mortons ( MRT) was started at outperform at Wachovia.