Morning Update

Post Santa Gains

Traders are coming back from yesterday's Christmas Day holiday in an upbeat mood but volume is expected to be light heading into the weekend. News is also sparse, with GMAC announcing it will become a bank, while SpendingPulse said sales in the 2008 holiday shopping season were well below a year ago. Meanwhile, Treasuries are slightly higher in a shortened session today. Markets in Europe were closed, while is Asia, industrial production in Japan plunged and markets were mixed.

As of 8:33 a.m. ET, the March S&P 500 Index Globex futures 7 points above fair value, the Nasdaq 100 Index is 4 points above fair value, and the DJIA is 46 points above fair value. Crude oil is up $0.88 to $36.23 per barrel, and gold is up $2.40 at $850.40. Due to the Christmas holiday, the British Bankers Association did not provide the daily setting for the LIBOR rate.

GMAC Financial Services announced that its application to become a bank holding company has been approved by the Federal Reserve. As a bank, GMAC said it will have expanded access to funding and capital, and analysts were quick to point out that as a bank, GMAC will be able to tap government funding programs. General Motors (GM $3), which is trading higher on the news, and Cerberus will have to reduce their ownership equity to comply with banking regulations.

Elsewhere, SpendingPulse, a retail data service of MasterCard Advisors, said sales at US retailers may have fallen as much as 4% during the holiday shopping season due to bad weather and the poor economic climate. The data showed that sales fell by about 2% in November and 4% in December as the year-long recession, falling employment, and growing caution among consumers limited purchases. In response, retailers have offered steeper discounts than usual to entice reluctant shoppers. An executive at SpendingPulse said this was probably one of the most challenging Christmas shopping seasons "in modern times." Nonetheless, Amazon.com (AMZN $51) said that the 2008 holiday shopping season was its best ever. However, the online retailer did not provide any details on profitability or sales.

Early bond market closure

Treasuries are inching higher in light post-Christmas Day trading, while the bond market will close at 2 p.m. ET. There are no major economic reports scheduled to be released today.

Production in Japan plunges

European markets remained closed for the Christmas holiday. Elsewhere, traders in Tokyo looked past a plunge in industrial output last month and the Nikkei 225 Index posted a 1.6% advance as technical factors and year-end buying helped the broader averages. Preliminary data showed that industrial production fell 8.1% in November, the biggest drop on record and worse than an expected 6.8% decline. The huge decline is solidifying sentiment that the world's second-largest economy is in a fairly serious recession as exports decline. Moreover, the job-to-applicant ratio fell from 0.80 to 0.76, the lowest reading in almost five years and the jobless rate edged higher.

Elsewhere around Asia, stocks in South Korea lost almost 1.0% but Hynix Semiconductor (HXSCL $33), the world's second-biggest maker of memory chips, finished higher after announcing plans to cut back on investment spending. A slowdown in capacity expansion raised hopes that the glut in memory chips might be more quickly absorbed. AU Optronics (AUO $7), the largest LCD maker in Taiwan and the third-largest in the world, gained ground after saying it is open to a merger and the government in Taiwan said it would support the industry.