Morning Update

Trying to Rebound from Lingering Global Debt Concerns

Stocks are modestly higher in morning action as traders are looking to recover from yesterday's steep declines on persistent debt concerns toward Dubai and Greece, which have called the pace of the global economic recovery into question. However, pressure on shares of chipmaker Texas Instruments, even after the company raised its 4Q EPS guidance, is limiting today's modest morning advance. Treasuries are lower as equities are up slightly, ahead of a report on wholesale inventories and after MBA mortgage applications rose. In other equity news, Men's Wearhouse issued disappointing guidance, while Rambus announced that it has agreed to a settlement with the European Commission. Overseas, Asia came under pressure after Japan's GDP was revised lower, while European markets are flat.

As of 8:53 a.m. ET, the December S&P 500 Index Globex future is 2 points above fair value, the DJIA is 16 points above fair value, while the Nasdaq 100 Index is 4 points above fair value. Crude oil is higher by $0.61 at $73.23 per barrel, and the Bloomberg gold spot price is up $16.30 at $1,144.70 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is down 0.4% at 76.01.

Texas Instruments (TXN $26) released its scheduled business outlook for 4Q, in which the chipmaker raised its EPS target and increased the lower end of its previous revenue forecast. TXN now sees earnings for the final quarter of the fiscal year to be in a range of $0.47-0.51, versus its prior view of $0.42-0.50, and revenues to come in between $2.90-3.02 billion, compared to its prior range of $2.78-3.02 billion. Analysts are calling for the company to post EPS of $0.47 and revenues of $2.9 billion, but shares are under pressure in early trading, suggesting that the Street may have expected a larger increase in the company's EPS and sales targets. However, the company's head of investor relations told analysts on a conference call that the company was having difficulty keeping up with increasing demand, but these pressures are "not dissimilar from what many of our competitors are seeing as well."

Men's Wearhouse (MW $22) reported 3Q EPS of $0.37, four cents above the consensus estimate of Wall Street analysts, and revenues rose 0.5% versus last year to $462 million, topping the $454.5 million that was expected. However, shares are under pressure after the clothing retailer issued a loss forecast for 4Q, which compared to the Street's expectation for the company to post a profit.

Rambus Inc. (RMBS $21) announced that the European Commission (EC) has accepted commitments proposed by the technology licensing firm to resolve a matter regarding royalties. RMBS has pledged to offer licenses with maximum royalty rates worldwide on computer memory chip patents for five years to settle antitrust charges and avoid a fine.

Mortgage apps increase, wholesale inventories wait in the wings

Treasuries are lower in morning action as the economic calendar remains relatively light, with the lone release ahead of the opening bell being the US MBA Mortgage Application Index, which rose 8.5% last week, after the index, which can be quite volatile on a week-to-week basis, gained 2.1% in the previous week. The increase came despite a 9 basis-point gain in the average 30-year mortgage rate to 4.88% versus the previous week, as advances in both the Refinance and Purchase indexes of 11.1% and 4.0%, respectively, supported the rise in the overall application gauge. The average 30-year mortgage rate remains above the record low of 4.61% that was reached at the end of March.

Shortly after the opening bell, wholesale inventories will be released, forecast to decline 0.5% for October, after dropping 0.9% in September, marking the 13th-consecutive monthly decline and the lowest level since May 2006.

Europe nearly unchanged following some afternoon resiliency

Stocks in Europe are near the flatline as the markets across the pond have overcome early pressure that came courtesy of persistent fears regarding exposure to Dubai's debt and continued fallout from yesterday's credit downgrade of Greece by Fitch Ratings. Strength in basic materials and telecom issues are helping foster the afternoon resiliency as stocks rebound from yesterday's steep decline as the aforementioned debt concerns were exacerbated by disappointing industrial production reports out of the UK and Germany-Europe's largest economy. In equity news, Volkswagen (VLKAY $23) is higher to support the modest advance after Europe's largest carmaker announced that it has agreed to pay 222.5 billion yen ($2.5 billion) for close to a 20% stake in Japanese automaker Suzuki Motor Corp. (SZKMF $26).

Asia falls as Japan's GDP revised lower

Stocks in Asia were mostly lower as continued concerns about the impact of debt problems in Dubai and Greece on financial institutions around the globe lingered, and after a disappointing GDP revision in Japan. The Japanese government reported that 3Q GDP in the nation was downwardly revised to an annualized rate of 1.3%, compared to the initial reading of 4.8% and the expectation of economists surveyed by Bloomberg, which called for a revision to 2.8%. Business investment was the biggest reason for the revision as capital spending fell versus the initial report, which showed the component grew. The Nikkei 225 Index fell 1.3% following the announcement and as the recent rebound for the yen against the dollar this week continued to pressure export issues on the dampened outlook of the impact the stronger currency could have on revenues of companies that rely on sales in the US. The festering fears about the sustainability of the global economic recovery and the resulting strength in the dollar weighed on commodities, which led to weakness in shares in the resource rich nation of Australia, as the S&P/ASX 200 Index declined 0.7%, exacerbated by a report that showed consumer confidence in the land down under fell in December. Elsewhere, China's Shanghai Composite Index dropped 1.7% and Hong Kong's Hang Seng Index fell 1.4%, while Taiwan's Taiex Index and South Korea's Kospi Index both bucked the trend by posting gains of 0.4%.