Stock futures were higher this morning, indicating stocks might open higher after Monday's selloff. Hopes that an aggressive Federal Reserve helped improve investors' sentiment, even as Texas Instruments' results didn't.On Monday, stocks tumbled for the third straight session. Financials were hard hit after chatter about liquidity problems at Bear Stearns (NYSE: BSC) dropped the shares over 11%. Bear denied the rumors. Lehman Brothers (NYSE: LEH) was hard hit as well dropping 7.3%. Strong February sales from McDonald's (NYSE: MCD) couldn't offset concerns about the finance and credit system, but MCD stock gained 2.9%. The Dow industrials finished 153 points, or 1.29%, lower, the S&P 500 lost 20 points, or 1.55%, and the Nasdaq Composite dropped 43 points, or 1.95%.
Only January trade balance data is on the economic calendar, to be released at 8:30 a.m. EDT.
Still, this morning, the prospect of a Fed rate cut seems to boost sentiment, and was helped by a new economic report, the quarterly Anderson Forecast by the University of California at Los Angeles. The report says the U.S. economy should avoid slipping into a recession this year, even though jobs creation and consumer spending would suffer due to the slumping housing market. Still, if the credit crisis deepens, a recession could still occur.
Meanwhile, oil prices were steady above $107 a barrel even as Light sweet crude hit another record high of $108.41 in Tuesday's electronic trading session. Oil already rose to a new record in the previous session as the dollar weakened further. Expectations of another rate cut by the Fed, and consequently a lower dollar, keep pushing oil prices higher.
Despite the higher oil prices and the selloff in U.S. stocks Monday, stocks in Europe and Asia advanced. Earnings outlook for energy producers were boosted due to the higher oil prices. Other stocks advanced as well, like Vodafone (NYSE: VOD), which rose the most in a month after it was added to Goldman Sachs's "conviction buy" list.
On this side of the pond, Texas Instruments (NYSE: TXN) lowered its first-quarter profits and sales outlook, citing a key customer's decision to cut orders. The chip maker cut its outlook below analysts' expectations and shares are declining 1.5% in premarket trading.
Boeing Co. (NYSE: BA) said Monday it will formally protest the $35 billion refueling tanker contract the Air Force awarded to European Aeronautic Defence and Space Co. and Northrop Grunman Corp. (NYSE: NOC).
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