Morning Update

Posting a Negative Tally Following Yesterday's Rally

Stocks are looking lower in early action following yesterday's sharp rally on the details of the Treasury's plan to help detoxify the balance sheets of the banking industry. Treasuries are lower in early action as there are no major economic reports scheduled for release today, but Fed Chief Ben Bernanke and Treasury Secretary Timothy Geithner will testify on the bailout of AIG in front of the House Financial Services Committee. Equity news is light, as Newell Rubbermaid slashed its quarterly guidance and lowered its 1Q sales forecast. Overseas, Asian markets rallied, while Europe has given up early gains amid some profit taking.

As of 8:45 a.m. ET, the June S&P 500 Index Globex futures contract is 9 points below fair value, the Nasdaq 100 Index is 15 points below fair value, and the DJIA is 84 points below fair value. Crude oil is down $0.41 to $53.39 per barrel, and gold is down $31.00 at $921.50.

Newell Rubbermaid (NWL $7) is under pressure after the company reduced its quarterly dividend to $0.05 per share from $0.10 per share to improve financial flexibility and enable it to meet all near-term obligations and weather the current economic recession. The maker of rubber containers lowered its 1Q sales outlook, saying it now expects 1Q sales to be a mid-to-high teen percentage rate decline, versus its previous forecast of sales to decline at a low-to-mid teen rate. The company did reaffirm its 1Q EPS guidance.

Economic data absent, but testimony may be in focus

Treasuries are lower in early action as there are no major economic reports scheduled for release today. However, traders may pay some attention to Federal Reserve Chairman Ben Bernanke and US Treasury Secretary Timothy Geithner's testimony in front of the House Financial Services Committee at 10 a.m. ET on the government's rescue of AIG (AIG $1). The testimonies will probably not offer much on the economy, but the bailout of AIG has been a source of debate recently as the insurer has announced that it will pay bonuses to some employees after receiving taxpayer funds to help stave off a collapse of the company. Capitol Hill has threatened to increase taxes to recoup some, if not all, of the bonus money and may be causing some uneasiness among potential investors in the government's Term Asset-Backed Securities Loan Facility (TALF)-a program aimed at increasing lending available for consumer, and potentially, commercial real estate loans, which the Fed had to change due to lack of interest of financial institutions. Recently, there's reticence on the part of potential investors to participate in the TALF given the government's activist role in undoing contracts and taxing bonus payments.

Also, traders may be waiting for President Barack Obama's evening press conference tonight on the heels of yesterday's sharp rally in the equity markets that followed the release of the Treasury's Public-Private Investment Program-a plan to rid the toxic banking assets from the balance sheets of banks.

Early enthusiasm in Europe pared by profit taking

Stocks in Europe are modestly higher in afternoon action as early gains have been pared, thwarting the recent improvement in sentiment across the pond. The trading session began as if the sharp rally in the US on the Treasury's toxic asset plan would carry over and continue the recent momentum on optimism the global markets may be starting to show some signs of stabilization. However, basic materials, oil and gas, and financials issues-the biggest gainers amid the recent resilience across the globe-are weighing on stocks as traders take the opportunity to book some profits.

In equity news, the pressure on financials is coming despite more upbeat comments from some major banks in the euro zone region. Deutsche Bank's (DTBKY $123) CEO said Germany's biggest bank posted a "good start" to the year and due to reductions in risk and toxic assets, it expects to return to profitability. Also, Credit Suisse (CS $34) added to the plethora of upbeat comments about the start of the year, announcing that Switzerland's second-largest bank had a strong start to the year and it may raise capital for acquisitions.

Asia continues to climb

Stocks in Asia were broadly higher on the upbeat sentiment toward financials and the global economic recovery following the US Treasury's toxic banking asset plan that fueled a sharp rally on Wall Street. Japanese stocks were among the biggest winners as the optimism that carried over from the US was amplified by weakness in the yen, supporting export issues, which rely heavily on sales in the US. The Nikkei 225 Index gained 3.3%. Meanwhile, Hong Kong's Hang Seng Index gained 3.4% as the sweetened sentiment toward financials helped stocks trade among the biggest gainers.

Elsewhere, South Korea's Kospi Index posted a 1.9% increase amid the broad-based enthusiasm and after the country's government announced plans to spend 17.7 trillion won ($13 billion) on cash handouts, cheap loans, infrastructure and job training, according to Bloomberg, in an attempt to revive their economy. The finance ministry said today that the stimulus will boost economic growth by 1.5 percentage points and help create 552,000 new jobs.