Dow Flat Ahead of Bank Earnings

LONDON -- Stock index futures as of 7 a.m. EST indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI  ) may open down by a nominal two points this morning, while the S&P 500 (SNPINDEX: ^GSPC  ) may gain by a fraction of a point at the open.

Today sees the publication of the U.S. trade deficit for November at 8:30 a.m. EST. Forecasts suggest a shortfall of $41.2 billion, down slightly from $42.2 billion in October. Also due at 8:30 a.m. EST is December's import price index, which is expected to have risen by 0.1% after falling by 0.9% in November. Finally, at 2 p.m. EST, December's federal budget announcement is due.

After a quiet day yesterday, corporate earnings season picks up once more today with Wells Fargo expected to report its quarterly results before markets open. Consensus forecasts suggest earnings of $0.87 per share for the bank. Analysts are expecting the financial sector to have outperformed most other sectors over the last quarter, so Wells Fargo's results could prompt active trading in financial stocks. Staying with the financial sector, American Express announced yesterday that it would cut its headcount by 5,400 as it scales back its travel business in the face of online competition.

Other stocks that could be actively traded this morning include Ford after the automaker announced that it will hire 2,200 salaried employees this year as the American market gains strength.

European markets
European markets were largely unchanged this morning after overnight figures showed that inflation in China rose to 2.5% in December, up from 2% in November on an annualized basis. This raised concerns that the country might tighten its monetary policies sooner than expected to prevent inflation from breaching its 4% target. However, markets were cautiously optimistic following news of Japan's new 10 trillion yen stimulus program.

At 8 a.m. EST, the DAX was flat, the CAC 40 was down 0.26%, the FTSE MIB was down 0.21%, and the IBEX 35 was up 0.3%. In London, the FTSE 100 (FTSEINDICES: ^FTSE  ) was up 0.17%, with Lloyds Banking Group and Barclays bank among the biggest gainers on volume. The index was prevented from making any major gains by drops among big resource shares, including BHP Billiton, down 2.8%, and Tullow Oil, down 5.3% following a disappointing trading update.

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