Overnight U.S. Stock News

• March S&Ps this morning are little changed and down -0.90 of a point. The stock market yesterday finished higher after stronger-than-expected economic data bolstered confidence in the economy: Dow +0.36%, S&P 500 +0.62%, Nasdaq Composite +0.77%. Bullish factors included (1) the unexpected decline in weekly initial US unemployment claims (-3,000 to 420,000 versus expectations of +4,000 to 425,000), (2) the larger-than-expected increase in Nov US housing starts (+3.9% to 555,000 versus expectations of +6,000 to 550,000), and (3) the unexpected increase in the Dec Philadelphia Fed manufacturing index which expanded at its fastest pace in 5-1/2 years (+1.8 to 24.3 versus expectations of -7.5 to 15.0).
• Bearish factors included (1) concern that the European sovereign-debt crisis is worsening after Moody's Investors Service placed Greece's credit ratings on review for possible downgrade due to concerns about Greece's ability to cut debt to "sustainable levels" and a revenue shortfall this year, (2) concern that continued weakness in the US housing market may derail the economic recovery after the unexpected decline in Nov US building permits to a 19-month low (-4.0% to 530,000 versus expectations of +1.5% to 560,000), and (3) the increase in the 10-year T-note yield to a 7-month high of 3.56%.
• Oracle (ORCL) rose 4.6% in European trading after the company predicted that Q4 profit may climb to 48 cents to 50 cents a share, higher than analysts' estimates of 47 cents.
• Applied Materials (AMAT) climbed 1.2% in pre-market trading after Barclays Plc upgraded the world's largest producer of chip-making equipment to "overweight" with a target price of $17.00 per share.

Today's Market Focus

• March 10-year T-notes this morning are trading up +15 ticks. T-note prices yesterday closed higher as increased safe-haven demand for Treasuries from the ongoing European sovereign-debt crisis overshadowed stronger-than-expected US economic data: TYH11 +10, FVH11 +4.5, EDM11 +5.0. The 10-year T-note yield climbed to a 7-month high of 3.560% before turning lower. Bullish factors included (1) increased safe-haven demand for Treasuries after Moody's Investors Service placed Greece's credit ratings on review for possible downgrade due to concerns about Greece's ability to cut debt to "sustainable levels" and a revenue shortfall this year, and (2) the unexpected decline in Nov US building permits to a 19-month low (-4.0% to 530,000 versus expectations of +1.5% to 560,000). Bearish factors include (1) the unexpected decline in weekly initial US unemployment claims (-3,000 to 420,000 versus expectations of +4,000 to 425,000), (2) the larger-than-expected incre ase in Nov US housing starts (+3.9% to 555,000 versus expectations of +6.0% to 550,000), and (3) the unexpected increase in the Dec Philadelphia Fed manufacturing index which expanded at its fastest pace in 5-1/2 years (+1.8 to 24.3 versus expectations of -7.5 to 15.0).
• The dollar index this morning is trading little changed with the dollar/yen +0.13 yen and the euro/dollar +0.09 cents. The dollar index yesterday finished slightly lower as short-covering in the euro ahead of the 2-day meeting of EU leaders offset stronger-than-expected US economic data that boosted Treasury yields: Dollar Index -0.080, USDJPY -0.326, EURUSD +0.00299. Bearish factors for the dollar included (1) concern that the US housing crisis may derail the economic recovery after Nov US building permits unexpectedly declined to 19-month low, (2) euro short-covering ahead of the 2-day summit in Brussels by EU leaders to discuss the debt crisis, and (3) the larger-than-expected increase in the Dec German PMI manufacturing index to a 5-month high, which is euro positive. Bullish factors included (1) stronger-than-expected US economic data on weekly initial unemployment claims and Dec Philadelphia Fed manufacturing, which sent the yield on the 10-year T-note to a 7-mo nth high of 3.56% and improves the dollar's interest rate differentials and may increase demand for dollar assets, (2) the action from Moody's Investor's Service to place Greece's Ba1 local and foreign currency government bond ratings on review for possible downgrade, which is euro negative and may increase the safe-haven demand for the dollar.
• January crude oil prices this morning are trading -18 cents a barrel and January gasoline is +0.37 of a cent per gallon. Crude oil and gasoline prices yesterday traded on the defensive most of the day due to strength in the dollar: CLF11 -$0.92, RBF11 -0.49. Bearish factors included (1) stronger-than-expected US economic data that boosted the dollar, and (2) the weaker than expected Dec Euro-Zone PMI composite which signals a decrease in energy consumption. Bullish factors included (1) the unexpected decline in US weekly unemployment claims along with the unexpected increase in the Dec Philadelphia Fed manufacturing index to its best level in 5-1/2 years, which signals an economic recovery that has legs and may boost fuel demand, and (2) the action by Barclays Plc to hike its crude oil forecast for next year to $91 a barrel from $85, saying that OPEC won't consider increasing oil production until crude prices reach $100 a barrel, rather than raising crude output befor e prices rise that far.