Morning Call: Stocks stabilize following Monday's plunge; Mar E-mini S&Ps up +0.39%; Jan WTI crude oil down -2.93% to a 1-1/4 year low.
Related Stocks
 ESH19 - S&P 500 E-Mini
SymLastChgPct
ESH192,791.25s+17.00+0.61%
HGH192.9515s+0.0545+1.88%
CLF1947.20s+0.96+2.08%
DXY0096.507s-0.098-0.10%
ZNH19122-045s+0-075+0.19%
GCG191,329.2s+5.7+0.43%
SIH1915.914s+0.113+0.72%
RBF191.3237s-0.0025-0.19%
NSC183.30+0.36+0.20%
CVS61.95-0.40-0.64%
BA424.05+6.47+1.55%
JNJ136.60+1.18+0.87%
ABT76.13+0.99+1.32%
HQY80.39+1.02+1.29%
EW172.51-1.43-0.82%
ORCL52.48+0.37+0.71%
EOG95.53+0.18+0.19%
BSX40.52+0.40+1.00%
MRO16.89+0.21+1.26%
PBYI26.68+0.55+2.10%

Overnight Markets and News

Mar E-mini S&Ps (ESH19 +0.39%) this morning are up +0.39% as stock prices stabilize following Monday's plunge to a 14-1/2 month low. European stocks are up +0.02% as they gave up most of their gains after German Dec IFO business fell more than expected to a 2-year low. Weakness in energy stocks and commodity producers are limiting the upside in the overall market as global demand concerns weigh on industrial metals and crude prices with Mar COMEX copper (HGH19 -1.56%) down -1.52% at a 1-month low and Jan WTI crude oil (CLF19 -2.81%) down -2.93% at a 1-1/4 year low. Asian stocks settled mostly lower: Japan -1.82%, Hong Kong -1.05%, China -0.82%, Taiwan -0.70%, Australia -1.22%, Singapore -2.21%, South Korea -0.42%, India +0.21%. China's Shanghai Composite fell to a 2-week low on negative carry-over from Monday's plunge in U.S. equity markets along with a keynote speech by Chinese President Xi Jinping to mark China's 40th anniversary of the Reform and Opening Up campaign that offered no fresh commitments to open up or stimulate China's economy.

The dollar index (DXY00 -0.31%) is down -0.35% at a 1-week low as the decline in the 10-year T-note yield to at a 3-1/2 month low of 2.821% undercuts the dollar's interest rate differentials. EUR/USD (^EURUSD +0.35%) is up +0.35% at a 1-week high. USD/JPY (^USDJPY -0.42%) is down -0.43% at a 1-week low.

Mar 10-year T-note prices (ZNH19 +0-045) are up +6 ticks at a 1-week high.

The German Dec IFO business climate fell-1.0 to a 2-year low of 101.0, weaker than expectations of -0.3 to 101.7.

U.S. Stock Preview

Key U.S. news today includes: (1) Nov housing starts (expected -0.2% to 1.226 million, Oct +1.5% to 1.228 million), (2) FOMC begins 2-day policy meeting.

Notable Russell 1000 earnings reports today include: FedEx (consensus $3.94), Darden Restaurants (0.91), FactSet Research (2.29), Jabil (0.88), Micron Technology (2.94).

U.S. IPO's scheduled to price today: none.

Equity conferences during the remainder of this week: none.

Market Comments

Mar S&P 500 E-minis (ESH19 +0.39%) this morning are up +10.00 points (+0.39%). Monday's closes: S&P 500 -2.08%, Dow Jones -2.11%, Nasdaq 100 -2.22%. The S&P 500 on Monday sold off to a 14-1/2 month low and closed sharply lower. Stocks were undercut by fears that the FOMC at its Tue/Wed meeting might not only raise interest rates but might also signal that its rate-hike regime will continue unabated. There was also weakness in insurance and health care stocks after a court ruling late last Friday jeopardized Obamacare by declaring key elements of the program unconstitutional. Stocks were also undercut by weak U.S. economic data with the -12.4 point decline in the U.S. Dec Empire manufacturing index to a 1-1/2 year low of 10.9 (weaker than expectations of -3.3 to 20.0). There was also weakness in homebuilders after the U.S. Dec NAHB housing market index unexpectedly fell -4 to a 3-1/2 year low of 56, weaker than expectations of unchanged.

Mar 10-year T-notes (ZNH19 +0-045) this morning are up +6 ticks at a 1-week high. Monday's closes: TYH9 +8.5, FVH9 +5.00. Mar 10-year T-notes on Monday closed higher on the weaker-than-expected Dec Empire manufacturing index and Dec NAHB housing market index. T-notes were also supported by increased safe-haven demand with the slump in the S&P 500 to a 14-1/2 month low and by the decline in the 10-year T-note breakeven inflation expectations rate to a 1-1/4 year low.

The dollar index (DXY00 -0.31%) this morning is down -0.344 (-0.35%) at a 1-week low, EUR/USD (^EURUSD +0.35%) is up +0.0040 (+0.35%) at a 1-week high, and USD/JPY (^USDJPY -0.42%) is down -0.49 (-0.43% at a 1-week low. Monday's closes: Dollar Index -0.311 (-0.32%), EUR/USD +0.0042 (+0.37%), USD/JPY -0.56 (-0.49%). The dollar index on Monday closed lower on the sell-off in the S&P 500 to a 14-1/2 month low, which boosted safe-haven demand for the yen and knocked USD/JPY to a 1-week low. The dollar was also undercut by the weaker-than-expected U.S. economic data on Dec Empire manufacturing and the Dec NAHB housing market index, which was dovish for Fed policy.

Metals prices this morning are mixed with Feb gold (GCG19 +0.02%) +1.4 (+0.11%), Mar silver (SIH19 -0.37%) -0.019 (-0.13%), and Mar copper (HGH19 -1.56%) -0.042 (-1.52%) at a 1-month low. Monday's closes: Feb Comex gold (GCG19) on Monday closed up +10.4 (+0.84%) and Mar Comex silver (SIH19) closed up +0.122 (+0.83%). A weaker dollar pushed metals prices higher Monday along with a selloff in stocks. The S&P 500 tumbled to a 10-1/4 month low Monday, which boosted safe-haven demand for gold. Recent stock market turmoil has been a bullish factor for gold on increased demand for gold as a store of wealth after long gold positions in ETFs rose to a 4-1/2 month high last Friday. On the negative side for silver is weaker-than-expected U.S. economic data that signals reduced demand for industrial metals after Monday's Dec Empire manufacturing index dropped to a 1-1/2 year low and the Dec NAHB housing market index plunged to a 3-1/2 year low. Also, fund selling of silver continues as long silver positions in ETFs fell to a 5-1/2 month low last Friday. A negative factor for gold is reduced inflation expectations, which curbs demand for gold as an inflation hedge, after the 10-year T-note inflation expectations rate sank to a 1-1/4 year low.

Jan WTI crude oil prices (CLF19 -2.81%) this morning are down -$1.46 per barrel (-2.93%) at a 1-1/4 year low and Jan gasoline (RBF19 -2.32%) is down -3.38 cents per gallon (-2.40%) at a 2-week low. Monday's closes: Jan WTI crude oil (CLF19) on Monday closed down by -$1.32 per barrel (-2.58%) and Feb Brent crude (CBG19) closed down -$0.67 (-1.11%). Jan RBOB gasoline (RBF19) closed down by -2.39 cents per gallon (-1.67%). Crude oil gave up an early rally Monday and sold off to a 2-week low on signs of increased global production and suspect energy demand. Russian oil crude output is on the rise after Interfax reported that Russian December crude production rose by +60,000 bpd to 11.43 million bpd from November's level. Also, a slump in the S&P 500 to a 14-1/2 month low Monday undercut confidence in the economic outlook and in energy demand. Crude prices opened higher Monday on the lower dollar and on positive carry-over from last Friday's data from Baker Hughes that showed active U.S. oil rigs in the week ended December 14 fell by -4 rigs to a 1-3/4 month low of 873 rigs.

Overnight U.S. Stock Movers

Norfolk Southern (NSC -2.19%) was upgraded to 'Overweight' from 'Neutral' at JPMorgan Chase with a price target of $203.

CVS Health (CVS -1.66%) was rated a new 'Overweight' at Barclays with a price target of $91.

Boeing (BA -0.82%) gained more than 1% in after-hours trading after it boosted its share buyback plan by $2 billion to $20 billion from $18 billion and boosted its quarterly dividend to $2.055 per share from $1.71 per share.

Johnson & Johnson (JNJ -2.90%) rose nearly 1% in after-hours trading after it said it will buy back as much as $5 billion of its own stock.

Abbott Laboratories (ABT -1.43%) was rated a new 'Outperform' at Credit Suisse with a price target of $82.

HealthEquity (HQY -3.96%) was upgraded to 'Overweight' from 'Neutral' at Cantor Fitzgerald with a price target of $82.

Edwards Lifesciences (EW -3.19%) was rated a new 'Outperform' at Credit Suisse with a price target of $188.

Oracle (ORCL -1.87%) gained more than 1% in after-hours trading after it reported Q2 adjusted EPS of 80 cents, better than consensus of 78 cents.

EOG Resources (EOG -3.87%) was rated a new 'Buy' at SunTrust Robinson Humphrey with a price target of $130.

Boston Scientific (BSX -4.89%) was rated a new 'Outperform' at Credit Suisse with a price target of $42.

Marathon Oil (MRO -2.13%) was rated a new 'Buy' at SunTrust Robinson Humphrey with a price target of $25.

Puma Biotechnology (PBYI -5.14%) climbed more than 5% in after-hours trading after it reported positive results in its Phase III trial of its Neratinib in patients with metastatic breast cancer.