At the open: S&P 500 retakes 1,500, loonie takes a dive

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North American stock markets opened higher, with the S&P 500 once again flirting with 1,500 but unable to make a convincing break above that key level. The Canadian dollar fell further below parity with the greenback to six-month lows after a surprisingly tame inflation report.

In early trading, the S&P/TSX composite index was up 49 points, or 0.3 per cent, at 12,873; the S&P 500 was up 6 points, or 0.4 per cent, at 1,501; and the Dow Jones industrial average was up 41 points, or 0.2 per cent, at 13,869. Over at the Nasdaq, the day is starting much more upbeat than on Thursday, with the index up 0.5 per cent at 3,147.

There are a number of positive factors that investors are feeling good about this morning. The U.S. corporate earnings season continues to be strong, with 75 per cent of the 142 companies in the S&P 500 index releasing results so far for the fourth quarter beating profit expectations. Economic data out of China this week continue to suggest the country has been successful is speeding up economic growth while also keeping a lid of inflation. The debt crisis in the U.S. has been kicked months down the road, and the latest data from the country - including on employment and housing - suggest the economy is picking up steam.

And concerns about the European debt crisis are receding. Today in Europe, there was more positive news, as the European Central Bank said lenders will repay more of its loans than economists had expected. The news that the banks will repay $184.3-billion (U.S.) in three-year loans next year - an indication that they are comfortable in offloading excess liquidity - helped the euro to strengthen 0.6 per cent to an 11-month high this morning. Also supportive was an unexpectedly strong rise in the ifo Institute's business-climate index for Germany, which rose to 104.2 in January from 102.4 last month.

Japan's stock market is also back on firmer ground after stumbling earlier this week on disappointment that the Japanese central bank didn't go far enough in announcing its so called "bold" new monetary stimulus measures. Overnight, the Nikkei soared 2.8 per cent as the yen dropped sharply against the U.S. dollar.

With so many bullish factors, market participants have been growing increasingly concerned about missing out on further rallies, even while being fearful of short-term pullbacks.

One negative note for Canadians though considering shopping for U.S. stocks: the loonie is weakening further against the greenback, and this morning is almost a full cent below parity. It was last trading down half a cent at 99.27 (U.S.) cents, with selling in the currency intensifying after Canadian inflation came in at 0.8 per cent in December on an annualized basis, below the 1.2 per cent economists had expected. It was a further indication that the Bank of Canada will be in no rush to hike interest rates.

In U.S. economic data this morning, the Commerce Department reported annualized new home sales of 369,000 in December, missing Street expectations for 385,000. But that's still 8.8 per cent higher than a year ago.

Here's a look at some key stocks that are on the move this morning.

Microsoft reported late Thursday that its fiscal second-quarter net income dropped 3.7 per cent, largely in line with Street estimates. Shares are down 0.4 per cent at the open.

Starbucks Corp. late Thursday reported a 13-per-cent jump in first-quarter profit, meeting analysts' estimates, but sales in the U.S. and Asia were better than expected. Shares are up 4.4 per cent in the premarket.

Procter & Gamble's profit in its latest quarter more than doubled, and both its profit and revenues beat analysts' forecasts. The stock is up 3.4 per cent.

Weyerhaeuser Co, a producer of forest products, reported its highest revenue in more than four years thanks to the U.S. housing recovery. While both profit and revenues beat expectations, its shares are down 3.5 per cent.

Kimberly-Clark Corp. reported profit above Street expectations. Shares are up 0.5 per cent.

Apple shares this morning are flat, suggesting a lot of cautiousness among bargain hunters.

Research In Motion Ltd. shares are up nearly 2 per cent on the TSX. They rose Thursday after comments by a Lenovo Group Ltd. executive that the Chinese computer company was looking at possible acquisitions, including RIM.

Hasbro Inc. announced plans to cut 10 per cent of its workforce as the toy maker warned that consumer demand for its products was lower than anticipated over the holiday season and that its fourth-quarter revenue didn't meet expectations. Shares are down 4 per cent.

Software firm Open Text Corp. said late Thursday it earned $1.04 per diluted share in its latest quarter as revenues grew to record levels. Shares opened down 2.7 per cent.