North American stock indexes opened weaker, with a lack of fresh news keeping the focus on the troubled outlook for U.S. budget discussions following last week's rather inconclusive "fiscal cliff" agreement.
In the opening minutes of trading, the S&P/TSX composite index was down 57 points, or 0.4 per cent, at 12,483; the S&P 500 was down 7 points, or 0.4 per cent, at 1,459; and the Dow Jones industrial average was down 64 points, or 0.4 per cent, at 13,370. New York oil futures were off by 37 cents at $92.72 (U.S.) per barrel, and gold was down $3.30 at $1,645.
The S&P 500 squeaked out enough of a gain on Friday to reach a five-year high, but hitting that threshold hasn't ignited much further buying momentum. Instead, traders remain concerned about how U.S. budget talks will shape up in the coming months - and are bracing for a new round of political brinkmanship.
The deal in Washington last week helped to settle the issue of tax hikes on high income earners, but simply kicked the can down the road on key decisions on spending cuts and the U.S. debt ceiling. Both the Republicans and Democrats over the weekend resumed pouring on the rhetoric, blaming each other for the lack of progress on a spending agreement. The two sides will need to find common ground before the end of February or risk another round of fiscal calamity that could dampen the U.S. and global economies.
This is a light week of U.S. economic reports, but the health of the corporate sector will once again return to focus, with Alcoa set to kick off the fourth-quarter earnings season after markets close on Tuesday. Analysts expect fourth-quarter earnings for the Standard & Poor’s 500 index to increase 3.28 per cent, said Christine Short, a senior manager at S&P Global Markets Intelligence. That’s an improvement from essentially flat profits in the third quarter.
In news out of Europe this weekend, regulators agreed to postpone the imposition of Basel III rules for another year, allowing banks more time to reach liquidity ratios. There were warnings the proposal would hurt lending and set back the economic recovery. The watering down of liquidity rules spurred a rally in European bank stocks this morning.
Elsewhere today, look for the latest gadgets to be on display at the Consumer Electronics Show in Las Vegas. Today is the officially designed "press day" at CES, with several media speeches planned by companies including Cisco Systems and Qualcomm.
Here's a look at some stocks moving on news this morning:
Bank of America Corp said it will pay $3.6-billion (U.S.) to Fannie Mae to settle claims related to residential mortgage loans for the nine years to the end of 2008. Shares are up 0.2 per cent in early trading.
Amazon shares are up 2.1 per cent at $264.90, an all-time high, after Morgan Stanley upgraded the company to "overweight."
Shares in U.S. genetics company Illumina Inc. are down 8 per cent after Roche Holding AG said it's not considering a bid for the company.
Air Canada and WestJet Airlines Ltd. said their load factors were at records in December and for all of 2012 on better traffic and capacity results. Air Canada shares opened up 5 per cent but WestJet shares are flat.