Morning Update

Slight Profits as Street Tries to Avoid Paralysis by Analysis

Stocks are slightly higher in early action as traders continue to analyze the impacts of the Fed's stunning commitment to purchase up to $300 billion in longer term Treasuries as part of its plan to deploy an additional $1 trillion to try to resuscitate the credit markets. Long-term inflation fears have crept into the analysis, which is also dampening some of the optimism toward the Fed's aggressive actions. Treasury prices are modestly higher, adding some pressure on the 10-year yield, while there are no key economic releases to catalyze sentiment on the Street. Commodity prices are giving back some of their recent gains from the dollar's drop, which sent crude oil above $50 per barrel and gold prices closer to the $1,000 per ounce mark. In equity news, Xerox Corp. cut its 1Q profit forecast, while Palm posted a much larger-than-expected loss. Overseas, markets are mixed.

As of 8:42 a.m. ET, the June S&P 500 Index Globex futures contract is 4 points above fair value, the Nasdaq 100 Index is 2 points above fair value, and the DJIA is 7 points above fair value. Crude oil is down $1.06 to $50.55 per barrel, and gold is down $11.00 at $947.80.

Xerox Corp. (XRX $5) slashed its 1Q EPS outlook, saying it now expects earnings to be in a range of $0.03-0.05 per share from its previous forecast of $0.16-0.20 per share. The document equipment firm said it expects enterprise spending on technology will continue to decline this year and it will expedite further costs savings to help offset the economic impact. XRX added that it will only access the credit markets on an opportunistic basis.

Palm (PALM $8) reported a net loss ex-items for fiscal 3Q of $0.86 per share, much wider than the Reuters forecast of a $0.61 per share loss, as revenues fell about 70%, led by a sharp decline in its smart phone sales. The maker of the Treo and Centro phones said it is proceeding through a challenging transitional period.

Treasuries slightly in the green as no economic data seen

There are no major economic reports set to be released today. Treasuries are modestly higher in early action, putting some pressure on short-to-mid range yields after they fell sharply on Wednesday following the Federal Reserve's announcement that it will purchase up to $300 billion in longer term Treasury securities.

Europe overcomes early pressure as material stocks gain to offset tech shares' wane

Stocks in Europe have moved slightly into the green in afternoon action as pressure on technology issues is being offset by strength in basic materials as commodity prices have found renewed strength this week. Ericsson (ERIC $9) is under solid pressure after its mobile communications joint venture with Sony (SNE $21)-Sony Ericsson Mobile Communications-warned that sales in 1Q will be much softer than last year, leading it to forecast a quarterly pretax loss. On the economic front, euro-zone industrial production fell the most on record in January, according to Bloomberg, pushing production down 17.3% on a year-over-year basis-the biggest decline since the data series began in 1986.

Asian adversity as Japan sits out the session

Stocks in Asia were mostly lower as traders also took the opportunity to book some profits in the financial sector after the week' surge on aggressive stimulus efforts around globe, and technology shares were also among the biggest laggards in the region. Hong Kong's Hang Seng Index dropped the most, falling 2.3%, and shares in Australia came under pressure as the recent run up in commodity prices failed to lift the resource-rich country. Meanwhile, China's Shanghai Composite Index and the Korean Kospi Index managed to finish in the green. Japanese markets did not contribute to the Asian session as the markets were closed for a holiday. In equity news, shares of China Mobile (CHL $43) came under pressure to weigh on the Hang Sang Index after Bank of America cautioned that the company's profits will decline, and Chinese trading web site, Alibaba.com (ALBCF $1) fell 12% after it reported full-year earnings that missed analysts' forecasts.