Is the Dow Set for a Third Day of Gains?

LONDON -- Stock index futures at 7:50 a.m. EST suggest that the Dow Jones Industrial Average (DJINDICES: ^DJI  ) may open 0.25% higher this morning, while the S&P 500 (SNPINDEX: ^GSPC  ) is set to rise about 0.2% when the opening bell rings.

Today's only economic data is November's housing starts, which are expected to have dropped to 865,000 from 894,000 in October, mostly due to the impact of Hurricane Sandy. However, while the fiscal-cliff negotiations are likely to hold investors' attention, several corporate earnings events today could prove to be useful economic indicators.

First among these were second-quarter earnings from FedEx (NYSE: FDX  ) , released at 7:30 a.m. EST. FedEx, usually considered to be a reliable bellwether for the economy, said profit declined 12% to $438 million, or $1.39 per share, in Q2. Analysts had been expecting EPS of $1.41. The company blamed weak air-network performance, the aftermath of Superstorm Sandy, and its customers' shift toward lower-cost shipping methods.

General Mills (NYSE: GIS  ) also reported earnings this morning. The company announced that it earned $0.86 per share (ex-items) on $4.88 billion in revenue, beating analyst EPS estimates of $0.79. Net income rose for the third straight quarter and is up 22% over the same period last year.

Oracle shares could be actively traded after the tech firm reported better-than-expected results after the bell last night.

European markets
European markets drifted higher this morning on fiscal-cliff hopes and general optimism. Last night, S&P upgraded Greece's credit rating from "selective default" to "B-" -- an impressive six notches in one move. This morning saw the yield on Portuguese 10-year government bonds fall below 7% for the first time since February 2011, prompting small gains for Spanish and Italian bonds.

As of 8 a.m. EST, the DAX is up 0.3%, the CAC 40 is up 0.5%, the FTSE MIB is 1.1% higher, and the IBEX 35 is up by 1.6%. In London, the FTSE 100 (FTSEINDICES: ^FTSE  ) is up 0.48%, led by Lloyds Banking Group, which continued to make strong gains this morning after hitting a new post-crisis high yesterday. Lloyds shares are up 3.9% at the time of writing.

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