Morning Update

Waiting for Relief to Try to End the Grief

Stocks are under pressure in early action as the Street is showing some anxiety toward the timeliness and structure of President Obama's economic stimulus plan that is being hotly debated in the Senate. Financials are in focus as Barclays reported upbeat second half earnings, and amid the delay of the unveiling of Treasury Secretary Timothy Geithner's bank rescue plan in the hopes to focus Capitol Hill's attention on the $800 stimulus package. In equity news, McDonald's Corp. reported strong January sales, while Whirlpool missed the Street's profit expectations. Treasuries are modestly lower, and overseas, world markets are mixed.

As of 8:44 a.m. ET, the March S&P 500 Index Globex futures contract is 5 points below fair value, the Nasdaq 100 Index is 8 points below fair value, and the DJIA is 38 points below fair value. Crude oil is up $0.79 to $40.96 per barrel, and gold is down $18.30 at $895.60.

Dow member McDonald's Corp. (MCD $58) is gaining ground after it announced that global same-store sales increased 7.1% in January. The number one fast food chain said 2009 is off to a good start as it continues to appeal to customers as it offers high quality, affordable meal options. US same-store sales rose 5.4% on its core menu and breakfast items, while Europe led January's performance as the company said the combination of premium menu offerings, classic favorites and everyday affordability continued to deliver results. Shares are higher.

Whirlpool Corp (WHR $36) is under pressure after reporting 4Q net earnings fell 76% to $0.60 per share, well shy of the Reuters estimate of $0.78, as revenues dropped 19% to $4.3 billion, also below expectations. The company said its earnings reflect sharply lower global unit sales and production volumes, higher material and oil-related costs and an unfavorable foreign currency exchange versus last year. The appliance maker added that the severity and scope of the global economic downturn has significantly increased over the last several months and has had a significant impact on consumer demand in all parts of the world. WHR issued full-year earnings guidance that came in below analysts' estimates.

Retail sales, stimulus plan, and Bernanke speech shape the week

Treasuries are modestly lower in early action as there are no key economic reports today, and the week will be relatively light on releases, with Thursday's advance retail sales most likely gaining the lion's share of attention. Sales on both the headline and excluding autos are expected to have declined in January as the consumer continued to save instead of spend in hopes to beef up their balance sheets in the face of huge jobs losses and the rising unemployment rate, as well as the tight credit markets.

The week's sentiment is most likely to be shaped by the outcome of the Obama Administration's economic stimulus package, which is expected to come to a vote in the Senate as early as today. President Obama is urging lawmakers to quickly pass the $800 billion stimulus package as job losses mount and the financial markets remain dysfunctional, and the sense of urgency to get the plan in place prompted US Treasury Secretary Timothy Geithner to postpone revealing his bank rescue plan that was expected today, until tomorrow. Due to additional massive losses, banks are facing renewed pressures and with interest rates at historic lows, the traditional monetary policy gas pedal is to the floor. The Federal Reserve has resorted to some unconventional means to get credit flowing again, with only tentative signs of success, and President Obama's administration is looking at a new approach-a "bad bank"-to tackle the heart of the problem.

Governments around the world are implementing reflationary policies, and currently believe that health care and technology are poised to outperform the overall market in the near term. In contrast, consumer staples and telecom will likely be hurt by investors' move away from defensive plays, and could underperform the market. Note that market conditions change quickly and, as such, we can and do update our sector viewpoints accordingly. Check back often for our latest views.

Other economic reports that will be released this week that deserve a mention include wholesale inventories on Tuesday, the trade balance on Wednesday, weekly initial jobless claims and business inventories on Thursday, while preliminary University of Michigan's Consumer Sentiment Index will round out the week on Friday.

Additionally, the Street will probably pay close attention to Federal Reserve Chairman Ben Bernanke's testimony on the central bank's lending programs at the House Financial Services Committee tomorrow at 1 pm ET.

Europe nearly unchanged as banking shares are in focus

Stocks in Europe have overcome early losses that stemmed from the uncertainty of the timing and structure of the US economic stimulus plan that is being debated on Capitol Hill. Banking shares are among the best performers after Barclays (BCS $6) announced that second-half net income jumped almost 50% to 2.66 billion pounds ($3.9 billion), versus the second-half results in the prior year, topping the Bloomberg forecast of 2.05 billion pounds. The UK's third largest bank said writedowns this year will be less than last year's 8.1 billion pounds, and it will suspend its final dividend for 2008. Shares are almost 10% higher in afternoon action. Elsewhere, French automakers are shrugging off Nissan Motor's (NSANY $6) warning of a loss and gained ground after reports the government will lend 6 billion euro to try to help the group manage the financial crisis.

Asia mixed as Japan comes under pressure

Stocks in Asia finished mixed as shares in Japan fell, but China, Australia, and Hong Kong managed to close in positive territory. The Nikkei 225 declined 1.3% and the broader Topix Index decreased 1.5%, led by banking shares as Nomura Holdings (NMR $6), Japan's largest brokerage, was sharply lower after saying it may sell about 300 billion yen ($3.3 billion), in an effort to strengthen its capital base. Automaker Nissan Motor, came under pressure, and after the close of trading in Japan, the company said it expected an annual loss of 265 billion yen ($2.91 billion)-the first in about a decade-versus its earlier projection of a profit for the year. The company also announced that it would eliminate 20,000 jobs worldwide and said it would scrap its second-half dividend.