Tuesday, July 31, 2012

U.S. Futures Rise After Italian Bond Auction

U.S. stocks were higher Tuesday following a relatively smooth Italian bond auction and as eurozone ministers worked to move forward with plans to bolster the region's bailout fund.

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Futures for the Dow Jones Industrial Average were rising 45 points, or 41.9 points above fair value, at 11,543. Futures for the S&P 500 were up 5.8 points, or 5.8 points above fair value, at 1196. Futures for the tech-heavy Nasdaq were rising 4.2 points, or 1 point above fair value, at 2225.

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Confidence in the ability of European leaders to resolve the region's debt crisis appeared to be improving, with Italy selling €7.5 billion ($10 billion) of debt Tuesday. The country sold three-year bonds at a 7.89% yield and 10-year bonds at a 7.56% yield.The euro was rallying to its highest level against the dollar in a week following the Italian bond sale, up 0.5% against the dollar. European Union finance ministers are expected to agree Tuesday on the specifics on the plan to expand their bailout fund to rein in debt contagion risks. This, after President Barack Obama on Monday pressured EU officials for more aggressive actions on resolving the debt crisis. Moody's said it could downgrade the subordinated debt of 87 banks across 15 countries on worries that governments wouldn't have the capacity to rescue them. Meanwhile, Standard & Poor's warned of a possible downgrade on the outlook on France's triple-A credit rating.London's FTSE 100 was up 0.15% and Germany's DAX was higher by 0.6%. In Asia, Japan's Nikkei Average finished up 2.3% and Hong Kong's Hang Seng index closed up 1.21% . At 9 a.m., the S&P/Case-Shiller home price index for September is expected to fall 3% year over year but inch up 0.1% month over month, according to estimates from Thomson One. The index rose 0.2% between July and August, with half of the 20 cities covered by the survey reporting an increase in home prices.At 10 a.m., the Conference Board's monthly consumer confidence index will be another closely watched metric. Consumer confidence is expected to improve to a reading of 44 after sinking to 39.8 in October. That decline put the index back at lows last seen during the recession of 2008-2009.American Airlines and its parent AMR(AMR) have filed for Chapter 11 bankruptcy protection and CEO Gerard Arpey has retired. The filing comes after the world's third-largest carrier reached a point when it seems unable, after five years of talks, to reach a contract deal with its pilots union. AMR shares fell 63% in premarket trading Tuesday to 60 cents.Thomas H. Lee Partners is interested in buying the U.S. operations of Yahoo(YHOO), sources familiar with the matter told Reuters. THL is hoping to do a leveraged buyout of Yahoo!'s U.S. business, which could be worth $5 billion to $6 billion, and draw on its experience running other media assets such as Nielsen, Clear Channel and Univision to turn around the ailing company, the sources said. Yahoo! shares rose 3.8% to $15.94 in premarket trading Tuesday.AT&T(T) has been working secretly on an 11th-hour deal to salvage its $39 billion merger with T-Mobile USA, The New York Times reported. AT&T is in talks with Leap Wireless(LEAP) to sell it a big piece of T-Mobile's customer accounts and some of its wireless spectrum, the Times reported, citing people involved in the negotiations. AT&T shares rose 2 cents to $27.57.Netflix's(NFLX) credit rating was lowered by Standard & Poor's on expectations the company will report a loss in 2012. S&P cut its assessment of Netflix's credit to 'BB-' from 'BB' and kept its outlook at stable. "Our expectation [is] that escalating content commitments will lower profitability over the intermediate term, international expansion will have a greater impact on overall profitability, and a return of domestic subscriber growth could occur slightly later than we initially expected," S&P credit analyst Andy Liu said in a statement. The stock was down 22 cents to $69.73.A federal judge rejected a proposed $285 million settlement between Citigroup(C) and the Securities and Exchange Commission over a $1 billion mortgage-bond deal and ordered a fresh trial. In his order, Judge Jed Rakoff said the pact was "neither reasonable, nor fair, nor adequate, nor in the public interest." Citigroup shares rose 16 cents to $25.21 in premarket trading Tuesday.January oil futures were rising 50 cents to $98.71 a barrel and February gold futures were up $3.40 to $1,717.90.The benchmark 10-year Treasury was falling 7/32, lifting the yield to 2%, while the U.S. dollar was falling against a basket of currencies, with the U.S. dollar index down 0.5%. Stocks soared Monday on robust Black Friday sales and signs that Europe is making progress toward resolving its sovereign debt crisis.>To contact the writer of this article, click here: Andrea Tse.

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