The news on the import/export front is not good. The Commerce Department reported that our trade deficit widened to $49.90 billion in July, a 21-month high. Economists surveyed by the Wall Street Journal had expected the deficit to come in at $42.7 billion.

The wider deficit was caused by a increased imports and a drop in exports. Exports shrank by 1.3% to $150.45 billion, while imports jumped to 3.1% to $200.35 billion, up from $194.42 billion.

Reaction to stronger-than-expected earnings from Alcoa (AA) may be put to the test by economic data. Tuesday's data includes the U.S. trade deficit, which grew unexpectedly during May. Driven by a large jump in imports from China, the trade gap widened 4.8% to $42.3 billion, the largest gap since November 2008. The Street expected to see the gap narrow to $39.0 billion during May.

Digging into the numbers a bit, U.S. imports increased 2.9% to the highest level since October 2008; a 12.1% increase in shipments from China helped push this number higher. U.S. exports increased 2.4% in May, which was the best gain since September 2008. This increase was driven by large gains for industrial supplies and materials, along with capital goods and smaller increases for cars and consumer goods.

How do we know that world trade is loosening up? One indication is the U.S. trade deficit. Unfortunately the U.S. has been running a growing trade deficit for the past two months. You may be asking, what causes our trade deficit? The U.S. trade deficit is caused by importing more goods than we export. In April the trade gap widened by 2.4% from March to $29.2 billion. This follows a 10-year low in February.

The trade gap narrowed by 53% from a year ago when world trade collapsed from the global recession. The slight gains in the past two months indicate that some improvement is occurring in world commerce.

Updated 9:15 a.m.

So much for the Dow beating its record. A day ago it looked like the Dow could reach an all time high of 11,723. But this morning stock futures are down sharply and yesterday the Dow fell 142 points.

The worries plaguing stocks now seem (at least to me), to be problems that have been around for a while -- the falling dollar, higher oil, higher gold, and the potential for the Fed to keep raising interest rates -- and traders weren't worrying so much about them just days ago 

What seems new -- and potentially dangerous to the U.S. economy -- is growing tension with China over its currency. The Treasury decided yesterday not to label China a "currency manipulator." Seems like a smart move, especially after reading this story in the Wall Street Journal (subscription required): "China Sans Manipulator Tag May Let Yuan Rise."

A rising U.S. trade gap with the rest of the world could heighten political pressures. But the latest trade figures, reported today at 8:30 a.m., provided better-than-expected news. The April trade gap was $62 billion when ecomomists thought it would be $67 billion. Earlier today China reported a trade surplus of $10.5 billion in April.

Also today we'll see a measure of consumer confidence developed by the University of Michigan. It will be closely watched as investors worry about the health of the consumer given higher gas prices.

Here's a look at some key Blogging Stocks this morning:

Apple (AAPL) shares are down 34 cents to $67.81 as of 9:12 a.m.  French legislators are weighing a new law that would  require Apple to open up iTunes to other music players.

Google (GOOG) is down $1.89 to $385.11 as of 9:13 a.m. Shareholders voted yesterday to let Google's founders hold onto the bulk of voting power. Read our live blog of yesterday's meeting.

Yahoo! (YHOO) is down 20 cents to $30.79 as of 9:12 a.m. CEO Semel spoke about pressures to provide information about users to Chinese authorities.

eBay (EBAY) is down 7 cents to $31.95 as of 9:13 a.m.