Stocks are rebounding from Tuesday's losses despite another round of selling in global equity markets. Shortly after the opening bell on Wall Street, the Dow Jones Industrial Average ($INDU) had added 22 points and the NASDAQ ($COMPQ) was up 4. The day's other news is mixed.
Stocks are reeling once again. In the Asia/Pacific, Japan's Nikkei average suffered a 502-point, or 2.9% loss. Hong Kong's Hang Seng tumbled 496 points or 2.6%. In Europe, key market averages are down between 1.5 and 2%. The declines overseas follow yesterday's sell-off in the United States, when the Dow Jones Industrials slid 242 points on the day and the NASDAQ lost 52.
General Motors (GM) is in focus early Wednesday after the automaker reported profits that fell short of analyst estimates. GM fourth quarter profit totaled 32 cents a share, which was well below analyst estimates of 90 cents. The shortfall was blamed on bigger than expected losses in its mortgage unit, which is 49% owned by GM. However, revenues rose more than expected. Shares are up 15 cents to $30.66 on the news.
Meanwhile, Lehman Brothers (LEH) is out with quarterly earnings of $1.96 a share, which is in-line with economist estimates. H&R Block (HRB) is under pressure after warning that it will post $29 million in losses due to subprime mortgages. Juniper Networks (JNPR) might fall after announcing the departure of its Chief Executive Officer.
In economic news, the latest current account data came in better than expected. According to the Commerce Department, the deficit narrowed to $195.8 billion during the fourth quarter, down from a revised $229.4 billion in the third quarter.
In other markets, crude is up 24 cents to $58.17 a barrel ahead of weekly inventory statistics due out at 10:30 a.m. Eastern time. Gold (April) is trading down $4.50 to $645 an ounce. Bonds are seeing profit taking after two solid days of gains. The benchmark ten year Treasury is down 5 ticks, pushing its yield back above the key 4.5% level.
Overall, the day's news is mixed and stocks are able to hold steady in early trading. However, the tone of the market remains poor, as investors remain defensive and anxious. The concern is that the problems in the subprime market will lead to a credit crunch and cause bigger problems for the broader economy. Those fears might be overblown. Nevertheless, as long as investors are focused on the issue, it is going to be very difficult for the major averages to form a sustainable rally.
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