The Before the Bell report is constantly updated to reflect the latest news developments and market moves in the premarket. Check back later for updates.
Optimism that a deal is close at hand to reopen the U.S. government and raise the nation's debt ceiling is lifting equity values this morning overseas, although U.S. and Canadian stock futures are nearly flat as the opening bell approaches, erasing modest gains from earlier this morning. A weaker-than-expected earnings report from Citibank - the first major U.S. bank to report third-quarter results - is weighing on sentiment.
Late Monday, top senate leaders made the most encouraging comments so far this month that the political impasse in Washington may be coming to an end. Senate Majority Leader Harry Reid, a Democrat, said leaders had made "tremendous progress" in talks and that he was hopeful today would be a "bright day." The Republican leader in the Senate, Mitch McConnell, expressed similar optimism, and the White House has postponed a planned afternoon meeting of congressional leaders with President Barack Obama so that Senate leaders have more time to finalize a deal.
According to the Wall Street Journal, the latest proposal would reopen the government at current spending levels until Jan. 15 and extend the debt limit until early February. The two parties would also begin longer-term negotiations on the budget, and aim for an agreement by Dec. 13.
This may, once again, be a kick the can further down the road agreement. But for equity markets, it would ease immediate concerns over a debt default by the end of this month and reopen the government in time to prevent a significant impact on economic growth rates.
The relief rally has already been well under way. U.S. stocks - which were open Monday while the Canadian market was closed for Thanksgiving - have risen for three straight days amid signals that a deal could get done. Europe's blue chip index, the Euro STOXX 50, rose to a 2-1/2-year high this morning, while Germany's DAX hit a fresh record high.
Gold and silver prices, which typically benefit as haven assets at times of economic and political uncertainty, are down sharply this morning. The U.S. dollar, which had slid significantly against major currencies amid the stalemate in Washington, is rallying this morning, hurting commodities that are priced in the greenback.
Aside from what comes out of Washington today, market players will be taking direction from several blue chip earnings reports being released, including from multinationals such as Coca-Cola. We have the rundown below.
Now, here's a closer look at what's going on this morning and what is to come.
MARKETS:
Equities:
Futures: S&P 500 -0.18 per cent; Dow -0.03 per cent; Nasdaq +0.03 per cent; S&P Toronto +0.12 per cent
Hong Kong's Hang Seng +0.51 per cent
Shanghai composite index -0.21 per cent
Japan's Nikkei +0.26 per cent
London's FTSE 100 +0.79 per cent
Germany's DAX +0.71 per cent
France's CAC 40 +0.55 per cent
Commodities:
WTI crude oil (Nymex Dec) -0.54 per cent at $101.93 (U.S.) a barrel
Gold (Comex Dec) -1.13 per cent at $1,262.90 (U.S.) an ounce
Silver (Comex Dec) -3.02 per cent at $20.71 (U.S.) an ounce
Copper (Comex Dec) -0.45 per cent at $3.29 (U.S.) a pound
Currencies:
Canadian dollar at 96.50 (U.S.), down 0.0011 from Monday's North American close.
U.S. dollar index up 0.34 at 80.60
Bonds:
U.S. 10-year Treasury yield 2.72 per cent, up 0.03
ECONOMIC INDICATORS TO WATCH:
Canadian September existing home sales rose 18.2 per cent from a year ago, above the 15 per cent rise economists had forecast. The average price rose 8.8 per cent, close to forecasts.
STOCKS TO WATCH:
Coca-Cola reported third-quarter earnings per share of 53 cents, matching Street estimates. Earnings of $12.03-billion came in a little short of the consensus estimate of $12.07-billion. Shares are up 1.5 per cent in the premarket.
Johnson & Johnson reported adjusted third-quarter earnings of $1.36, beating the $1.32 estimate. Shares are up 1.6 per cent in the premarket.
Citigroup reported adjusted third-quarter earnings of $1.02 versus the Street estimate of $1.04. Its sales also missed estimates, as the bank was hit by a slump in fixed-income trading revenue. Shares are down 1.3 per cent in the premarket.
Other earnings later today include: Intel and Yahoo.
Molycorp shares are down 20 per cent in the premarket after the rare earth producer disclosed in a regulatory filing that it is offering new shares and said it did not have effective control of its financial reporting as of last year.
ANALYST ACTIONS:
Jefferies upgraded Microsoft to "buy" from "hold" and raised its price target to $42 (U.S.) from $33.
Industrial Alliance Securities upgraded Colabor Group to "buy" from "hold" and raised its price target to $5.50 from $5.
Stonecap Securities upgraded SilverCrest Mines Inc. to "outperform" from "sector perform" and maintained a $2.50 price target.
RBC Dominion Securities downgraded Superior Energy Services to "sector perform" from "outperform" and cut its price target to $27 (U.S.) from $30.
Evercore Partners raised its price target on Facebook to $60 (U.S.) from $45 and reiterated an "overweight" rating.
Baird initiated National-Oilwell Varco with a "neutral" rating and $82 (U.S.) price target.
Barclays downgraded Merck to "equal weight" from "overweight" and cut its price target to $50 (U.S.) from $60.
Canaccord Genuity downgraded Coronado Biosciences to "hold" from "buy" and cut its price target to $2 (U.S.) from $18.
Goldman Sachs downgraded Teradata to "neutral" from "buy" and its price target was cut to $50 (U.S.) from $74.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
The one undeniably bullish fact of this bullish market.
The number of hedge fund bears are at the highest level this year.
An easy way to pick a winning stock.
How to profit from bubbles.
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For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities.
Darcy Keith