Stocks are indicated lower Monday morning, as trading is likely to remain cautious ahead of key decisions on the fiscal stimulus package and the financial rescue plan expected Tuesday. About 45 minutes before the opening bell on Wall Street, stock index futures hint at modest losses for both the Dow Jones Industrial Average and the NASDAQ in early trading.
With no economic data due out today and only one report on wholesale inventories Tuesday, a lot of focus will be on events in Washington during the next two days.
The Senate is voting on its version of the fiscal stimulus package today and the $827 billion stimulus bill is expected to pass sometime Tuesday. President Obama is pushing to have it by February 16, but the final bill must still be reconciled with the House's $819 billion version that has already passed.
Meanwhile, the Treasury Secretary Geithner's financial rescue plan is due to be unveiled Tuesday as well. It was expected today, but delayed one day because many officials in the Treasury Department "will be working and consulting with senators" on the fiscal stimulus package Monday, according a press release sent out over the weekend.
Federal Reserve Chairman Ben Bernanke testifies to the House Financial Services Committee about the Central Bank's recent efforts to provide liquidity on Tuesday as well.
With little news to guide trading Monday morning, bonds are holding flat in wait-and-see action. The benchmark ten-year Treasury sits unchanged in early pit trading and yields 2.992 percent.
The dollar is down .19 to 91.64 on the yen and the euro is a bit higher, up .0074 to 1.3017 on the greenback.
Crude oil edged up 44 cents to $40.61 a barrel, but gold slid $18.30 to $896 an ounce.
Among the stocks to watch, General Motors (GM) is seeing modest gains after the Wall Street Journal reported the automaker is in talks to take back large stakes in Delphi in order to get more government bailout money. Pfizer (PFE) might also help the Dow early after UBS upgraded the stock to Buy from Neutral. NYSE Euronext (NYX) is down 7 percent after reporting quarterly earnings of 55 cents, which missed Street estimates by 3 cents.
In the options market, sentiment turned decisively more bullish, as the Dow Jones Industrial Average rose 218 points on government stimulus and bailout hopes Friday. The CBOE Volatility Index (.VIX) finished down .35 to 43.38. Roughly 7.8 million calls and 6.2 million puts traded on the day.
Bullish trading was seen in a number of agricultural names ahead of a Goldman Sachs 13th annual ag conference later this week. Mosaic (MOS), Potash (POT) and CF Industries (CF) have been the subject of increasing options activity.
Ambak Financial (ABK), Regions Financial (RF), and MBIA (MBI) have been seeing bullish trading, with some speculators buying short-term premium on hopes the government financial rescue package might lift some low-priced names in the industry.
Bullish trading was also seen in Charles Schwab (SCHW), Calgon Carbon (CCC), and the SPDR Homebuilders Trust (XHB). Meanwhile, some bearish trading surfaced in Juniper Networks (JNPR), Tyco Electronics (TEL), and Linear Technology (LLTC).
Frederic Ruffy
WhatsTrading.com
