With few domestic headlines on the earnings and economy fronts, trading action today will likely lack in any meaningful directional thrust. The market is effectively in a wait-and-see mode for the earnings reporting season, which gets into high gear next week.
With respect to Europe, we have further evidence this morning that the growth outlook in the region is weakening. Estimates for German economic growth are unsurprisingly showing a modest decline in the fourth quarter, a precursor of tougher times for the region this year.
Renewed growth concerns aside, the overall tone of European headlines has lately been fairly stable. Yields in the government bond markets of Italy and Spain have been trending down over the last few days, helping create a favorable backdrop for key auctions by the two countries on Thursday.
We also have a European Central Bank (ECB) meeting on Thursday, where they are expected to keep interest rates unchanged following quarter-point rate cuts in December and November. The central bank may follow up on its pro-active liquidity action of a few weeks back when it pumped billions into the Euro-zone banking system with further actions.
In corporate news, the pending $17 billion merger between NYSE Euronext (NYSE) and Deutche Borse appears to be in trouble as European anti-trust regulators are proposing its rejection. The deal was announced almost a year ago and promised to create a big listing and trading platform for stocks, options and futures.
On the earnings front, we had Lennar Corp. (LEN) miss EPS estimates, but the homebuilder came ahead of top-line expectations and its gross margins improved.
LENNAR CORP -A (LEN): Free Stock Analysis Report
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