Dow Set to Rise on Euro Calm

LONDON -- The Dow Jones Industrial Average (INDEX: ^DJI  ) is likely to rise when markets open this morning, according to current premarket trading.

Although uncertainty over the eurozone situation persists, renewed vows of support from G8 leaders have stabilized markets somewhat. In the absence of any other developments, the European situation may remain quiet until May 23, when EU leaders will hold a summit in Brussels to discuss the crisis.

On a similar note, recent comments from Chinese premier Wen Jiabao have heightened traders' expectations that further stimuli might be applied to the Chinese economy in an attempt to revitalize slowing growth.

Most European markets rose in this morning's trading sessions, with the FTSE 100 (INDEX: ^FTSE  ) up by 0.7% just before noon and the CAC 40 and DAX indexes achieving similar gains.

In London, the biggest rise came from Man Group, which gained more than 6% on news that it has acquired hedge fund research specialist FRM Holdings in a deal involving limited initial cash outlay.

Barclays (NYSE: BCS  ) also experienced a surge in late morning, following the announcement that it will sell its 20% stake in BlackRock for $6.1 billion. Not all banks fared well, however. In Spain, shares in Banco Santander (NYSE: STD  ) fell following news that the bank's U.K. unit experienced abnormally high withdrawal levels last week.

With no economic data due at home today and a temporary state of calm in Europe, attention is likely to be on company news. One big story that could drive trading is the news that one of China's largest Internet companies, Alibaba Group, has agreed to repurchase the 20% stake held in the company by Yahoo! (Nasdaq: YHOO  ) in preparation for a possible IPO. The deal will give Yahoo! a cash influx of about $6.3 billion and around $800 million in new Alibaba preferred stock. The cash component of this $7.1 billion deal is equivalent to one-third of Yahoo!'s current market cap and is 20% more than its total revenue in 2011, so it's likely to attractor investors' interest.

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Earnings reports due today include Lowe's Companies, Campbell Soup, and Krispy Kreme. Facebook shares are also likely to see continued trading as the dust settles following Friday's IPO.

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Roland Head owns no shares mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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