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Wall St. Breakfast's Pre-Market Snapshot:

U.S. Futures

As of 8:40 AM ET

S&P 500: -7.75; 1,452.50
NASDAQ 100: -9.25; 2,046.00
Dow: -61; 13,129

International Indexes

Asia
NIKKEI 225: -0.74%; 15,042.56 (-112.05)
HANG SENG: -0.56%; 27,460.17 (-154.26)
SHANGHAI SE COMPOSITE: -0.87%; 5,269.82 (-46.46)
BSE SENSEX 30: -0.33%; 19,633.36 (-65.00)

Europe
FTSE 100: -0.66%; 6,249.40 (-41.80)
CAC 40: -0.27%; 5,508.80 (-14.83)
XETRA-DAX: -0.55%; 7,570.25 (-42.01)

Commodity Futures

(Reuters/Jefferies CRB)

Oil: +0.67%; $94.47 (+$0.63)
Gold: -0.09%; $786.30 (-$0.70)
Natural Gas: -0.47%; $7.96 (-$0.04)
Silver: -0.10%; $14.495 (-$0.015)

U.S. Breaking News

see today's Wall Street Breakfast for earlier news

Fed Governors, Traders Square Off Over Outlook

Minneapolis Fed President Gary Stern said Monday the U.S. housing market has not bottomed, but was more upbeat on consumer spending, which will continue to be supported by strong employment and income. "The adjustment in the housing market has still some way to go. The reason I say that is because of the huge inventory of unsold homes," Stern told reporters in Singapore. "I would expect new home building to remain quite constrained. It is also true foreclosures will go up rather than down over the next several quarters." He noted housing represents only 5-6% of the U.S. economy, adding, "At least so far, other aspects of the economy have more than outweighed the housing sector." Stern had no comment on the direction of future Fed action. "We have to see how things evolve," he said (Reuters).

Separately, Fed governor Randall Kroszner said Friday upcoming weak economic reports would not justify additional interest rate cuts. "A sequence of data releases consistent with the rough patch for economic activity that I expect in coming months would not, by themselves, suggest to me that the current stance of monetary policy is inappropriate," Kroszner said in New York. He added, "The downside risks to economic growth now appear to be roughly balanced by the upside risks to inflation." Kroszner is a member of the FOMC, which decides interest rate moves, although he stressed the views were his own. Lehman Brothers analysts recently ruled out the possibility of a rate cut at the Dec. 11 FOMC meeting: "Recent Fed speakers have continued to stress the uncertainties around the forecast for both growth and inflation and their desire to see more data before easing further. We continue to look for the Fed to pause in December, but to ease 75 basis points by mid-2008," (AFP).

Meanwhile, Bloomberg says Treasury bond futures markets, in which volatility has risen four of the past five weeks, are sending the Fed a clear message: The U.S. economy is so weak the Fed will need to lower interest rates at least another 0.75% to avoid a recession. Investors are telling the Fed, "You're wrong and we're going to lead you to the next ease," said Thomas Tucci of RBC Capital Markets. Fed fund futures dictate a 78% chance of a 0.25% reduction to 4.25% Dec. 11, 58% odds of another 0.25% cut in January, and 31% odds of a further cut to 3.75% in March. "The Fed will not only need to save the financial markets, in very short order they're going to have to start saving the economy," Jefferies' Tom di Galoma said. (Bloomberg).

Lowe's Lower on Disappointing Guidance

Lowe's is trading down early Monday following its report of disappointing Q4 guidance and a cut to full fiscal year (ending Feb. 1) guidance below expectations. Lowe's said Q3 net income fell by 10% to $643 million, or $0.43/share. Despite beating analyst estimates of $0.41/share, analysts pointed out a $0.05/share reduction in self-insurance liabilities some believed should be adjusted out. Q3 sales were up 3% to $11.6B, missing analysts' average estimate of $11.78B. For Q4, Lowe's forecast EPS of $0.25 to $0.29, compared to analyst estimates of $0.36. Full-year EPS estimates were cut to $1.83 to $1.87, from $1.97 to $2.01 previously; in late September, Lowe's said EPS may come in at the low end or slightly below its forecast, at which time analysts were expecting $2.01/share. Reuters Estimates show a consensus estimate of $1.93. Lowe's cited several factors impacting its Q3 results with emphasis on the housing market slump. The company called its Q4 guidance "conservative," and said it expects industry pressures to continue "well into 2008" (earnings call transcript later today). Analysts said they expect current 2008 consensus EPS estimates of $2.02/share to fall to at least $1.92. Lowe's said it is still gaining market share according to third-party data. Shares of Lowe's lost 0.2% to $25.01 on Friday and were last trading at $24.10 (-3.6%) in pre-market activity.


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Today's Market

(via Sam Collins, ChangeWave.com)

Recap of Last Week's Action

On Friday, the combination of an oversold market, a carryover from Wal-Mart's (NYSE:WMT) optimistic holiday sales forecast, and a few opinion upgrades on key stocks rallied the market from a critical technical support line. The technology stocks were the major beneficiary of Morgan Stanley's (NYSE:MS) upgrade for Hewlett-Packard (NYSE:HPQ), and the group also benefited when Cisco (NASDAQ:CSCO) announced a $10-billion stock buyback.

But there was other news that brought on more selling: October's industrial production was down 0.5% -- the largest decline since January -- and capacity utilization fell 0.5% down from the prior month, the first decline since May.

However, the market's technical condition had more to do with Friday's bounce than corporate news, and expiring November options may also contributed, as short sellers ran for cover.

Despite some negative news, the Dow Industrials closed at 13,177, up 67 points. The S&P 500 gained eight points to close at 1,459, and the Nasdaq gained 19 points, closing at 2,637. The NYSE traded 1.8 billion shares, with declines ahead of advances by 9-to-7, and the Nasdaq traded 2.5 billion shares, with declines ahead by 4-to-3.

For the week, stocks posted gains with the Dow Jones Industrial Average ahead by 1%, the S&P 600 advancing 0.3%, and the Nasdaq up by 0.7%.

On Friday, the December crude oil contract gained $1.67, closing at $95.10 a barrel. The Amex Energy SPDR (NYSEARCA:XLE) closed at $72.66, up $1.62, still holding above Tuesday's reversal at just above $70.

The December gold contract ended lower by 30 cents, closing at $787 per troy ounce, off by $47.70 -- it posted one of the worst weeks this year. The Philadelphia Gold/Silver Index [XAU] gained $2.68 on Friday to close at $172.68.

What the Markets Are Saying

Last week was as volatile we might have expected if the market was making a bottom.

Monday traded fairly high volume, even though it was a semi-holiday, and Tuesday recorded the second-biggest one-day rally of the year for the S&P 500 -- missing first place by just 0.01% -- while the Nasdaq had its best day in 4-1/2 years. The week concluded with a swinging affair; the spread from low to high was almost 300 points.

Tuesday's rally took the S&P 500 smack into the resistance at 1,490, and it promptly reversed but held above Monday's low of 1,439. On balance, it was an encouraging performance from a market that looked like it was ready to roll over and plunge another 5%.

It may take some time to establish a bottom and the SPX could even fall to 1,430 before washing out the bears, but for now I wouldn't take on any short-side plays.

Today's Trading Landscape

The following companies will report earnings today: Campbell Soup Co., China Sunergy Co., Concur Technologies Inc., Cyberonics Inc., Double Hull Tankers Inc., Dycom Industries, Eagle Test Systems, Perry Ellis International, Gold Reserve Inc., Hastings Entertainment Inc., Hewlett-Packard, Hurray Holdings Co., Iridex Corp., Longtop Financial Technology, Medtronic Inc., Nordstrom, Planar Systems Inc., Spire Corp., Talk America Holdings Inc., Too Inc., Valspar Corp., and Valuevision Media Inc.

The November homebuilders' index will be released at 1 p.m. Eastern (the consensus expects 17). Goldman Sachs (NYSE:GS) cut its rating of Citigroup (NYSE:C) to "sell" but the stock futures are up this morning, and Lowe's (NYSE:LOW) reported Q3 net of 43 cents a share versus estimates of 41 cents.

Asian Headlines

(via Bloomberg.com)

Asian Stocks Decline After Chinese Regulators Tell Banks to Cool Lending Asian stocks fell, led by China Mobile Ltd., after Chinese regulators told banks to cool lending that has fueled the world's fastest economic expansion.

Singapore Raises Growth Forecasts on Surge in Financial Services, Property Singapore raised its economic growth and inflation forecasts as financial services expanded the most in a decade, boosting property prices and bank lending.

Indonesian Commission Says Singapore's Temasek Breached Competition Rules Temasek Holdings Pte, a Singapore state-owned investment fund, breached Indonesian competition rules through cross-holdings in the nation's two biggest mobile- phone companies, an Indonesian regulator said.

Hong Kong's Jobless Rate Falls to Nine-Year Low of 3.9% as Markets Surge Hong Kong's jobless rate fell to a nine-year low as buoyant property and stock markets boosted consumption.

Indonesia Panel Says Temasek Broke Antitrust Rules, Must Sell Mobile Stake Temasek Holdings Pte was ordered to sell its stake in one of Indonesia's two biggest mobile-phone companies after regulators found the Singapore state-owned investment fund breached antitrust laws.

Bank of China May Take $1 Billion U.S. Subprime Charge, Core-Pacific Says Bank of China Ltd., the nation's third largest bank, may have to set aside 7.7 billion yuan ($1 billion) in provisions for U.S. subprime investments in the fourth quarter, according to Core Pacific-Yamaichi International Ltd.

European Headlines

(via Bloomberg.com)

Northern Rock May Not Get Extended Government Aid; Takeover Bids Received Northern Rock Plc's 25 billion-pound ($51 billion) loan from the Bank of England won't be extended indefinitely, limiting the value of potential bids for the U.K. bank that was bailed out in September.

Credit Agricole to Buy $1.18 Billion Bankinter Stake; Spanish Stock Rises Credit Agricole SA, France's second- biggest bank, agreed to buy a 14.99 percent stake in Bankinter SA for 809 million euros ($1.18 billion), gaining a foothold in Spain's retail-banking market.

Richemont, Remgro May Spin Off Stakes in BAT as Luxembourg Ends Tax Breaks Cie. Financiere Richemont SA, the luxury-goods company controlled by South Africa's Rupert family, may spin off its stake in British American Tobacco Plc before increased taxes in Luxembourg hurt the investment.

Swiss Life Sells Dutch, Belgian Units for $2.3 Billion; Plans Buyback Swiss Life Holding, Switzerland's largest life insurer, agreed to sell its Dutch and Belgian units for as much as 1.54 billion euros ($2.3 billion) and said it would use the proceeds to buy back shares.

Source: Pre-Market Snapshot