Stocks are modestly higher in morning trading though another subdued session appears to be in the cards for the markets as a lack of any major economic or equity news is being met with thin holiday volume. Treasuries are nearly unchanged in early action after yields on the longer end of the curve jumped yesterday. With equity news offering little to inspire a reaction on the Street, Allstate may be a stock that garners some attention after it filed a lawsuit against Dow member Bank of America regarding an investment in residential mortgage-backed securities. Overseas, Asia finished mostly higher as China rebounded, while Europe is mixed with UK markets finding some pressure in their first day of trading for the week.
As of 8:44 a.m. ET, the March S&P 500 Index Globex future is 2 points above fair value, the Nasdaq 100 Index is 5 points above fair value, while the DJIA is 13 points above fair value. Crude oil is $0.46 lower at $91.03 per barrel, and the Bloomberg gold spot price is down $1.65 at $1,404.25 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is down 0.2% at 80.22.
Insurance firm Allstate Corp. (ALL $32) filed a lawsuit against Dow member Bank of America Corp's (BAC $13 1) Countrywide Financial Corp regarding its investment in a pool of residential mortgage-backed securities, backed by Countrywide, which totaled more than $700 million. The suit claims that, "Countrywide began systematically to ignore the underwriting standards it touted," per Dow Jones Newswires. Bloomberg, which first reported the suit yesterday, noted that a spokesperson for BAC said, "We are still reviewing the complaint, but this unfortunately appears to be a situation where a sophisticated investor is looking for someone to blame for a downturn in the economy and losses on an investment it made." Damages sought by ALL were not disclosed.
All is quiet on the economic front
The US economic calendar is void of any major releases today, adding to the lack of any catalysts that could spark some conviction among traders as the year nears a close. Treasuries are nearly unchanged in early trading, with the yield on the two-year note 1 bp lower at 0.73%, while the yields on the 10-year note and the 30-year bond are flat at 3.48% and 4.53%, respectively. Yields on the longer end of the curve jumped yesterday despite some disappointing housing and consumer confidence data, but the light volume may have exacerbated the pressure on bond prices.
Europe mixed as UK markets return to action
Stocks in Europe are mixed in afternoon action, with most major markets across the pond gaining modest ground, while UK equities are finding some pressure in their first trading session of the week as they react to the China interest rate hikes that occurred over the weekend. Also, the UK markets are being dragged lower by a decline in shares of Smith & Nephew Plc (SNN $52) after the medical device maker received a letter from the US Food & Drug Administration (FDA) warning the company about quality control problems at its
plant in Germany. However, the European markets are being saddled with a lack of data and light holiday volume, which is contributing to subdued sentiment and lackluster action. However, there was an economic report released today that deserves a mention, as consumer prices in Germany-Europe's largesteconomy-rose more than economists had anticipated.
The UK FTSE 100 Index is down 0.3%, France's CAC-40 Index is advancing 1.0%, and Germany's DAX Index is gaining 0.4%.
Asia mostly higher as China rebounds
The equity markets in Asia finished mostly higher, led by stocks in China, which rebounded modestly from their recent slide, which was exacerbated by the Christmas Day interest rate hikes in China. Hong Kong's Hang Seng Index rose 1.5% and the Shanghai Composite Index increased 0.7%. Meanwhile, Australian markets reopened from an extended holiday weekend and the S&P/ASX 200 Index finished flat as traders grappled with mining issues in the wake of the Chinese rate hikes and the recent advance in commodities as of late. Elsewhere, Japan's Nikkei 225 Index and South Korea's Kospi Index both advanced 0.5%. However, volume in the region remained light with equity and economic news dormant during the final week of the year and traders appear to be focusing on what 2011 will hold.
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