Market Set to Reverse Losses Tuesday

Includes: DIA, IEF, QQQ, SPY, XHB
by: Jonathan Liss

U.S. markets looked ready to rebound from sharp selling during the previous two sessions Tuesday with S&P 500 futures up 12.2 points to 1,469.00, Nasdaq 100 futures higher by 14.75 points to 2,064.25 and DJIA futures rising 91 points to 13,360 (as of 8:32 AM ET). Earnings from Goldman Sachs (NYSE:GS) topped consensus estimates, sending the investment bank’s shares higher by 1.76% in pre-market action (full story). November Housing Starts came in slightly better than expected, at 1.19 million, versus consensus forecasts of 1.175 million. November Building Permits were in-line at 1.15 million.

Asian markets were mixed Tuesday, with the Nikkei off 0.27% and the Shanghai Composite lower by 0.83%. The Hang Seng managed gains of 0.51% and South Korea’s KRX 100 up 0.96% (full story). European indexes were broadly higher in mid-day trading, led by Germany’s DAX which was up 1.26%. The CAC 40 was up 1.08% while the FTSE was higher by 0.84% (full story).

U.S. homebuilder confidence failed to improve in December, holding to the same record low for a third straight month. Treasury Secretary Hank Paulson said Monday housing market woes will "take some time" to improve (full story). Philly Fed President Charles Plosser told the Wall Street Journal he doesn't believe a recession will occur in the coming quarters (full story).

The ECB announced Monday plans to offer unlimited funds to banks at below market rates in an auction Tuesday (full story). European banks took advantage of the 4.21% rate being offered, snapping up 348.6 billion euros during Tuesday’s auction.

Best Buy (NYSE:BBY) posted better-than-expected Q3 EPS, sending its shares higher 4% in pre-market trading. The company also upped its full year EPS guidance on a 23% jump in same-store entertainment software sales (full story).

Oil gained 1.2% to $91.72/bbl, while gold posted a gain of 0.74% to $805.20. The yield on the 10-year treasury rose 0.015% to 4.16% as notes fell to 100-22. There are no other economic reports expected out today. After the closing bell, Hovnanian (NYSE:HOV) and Palm (PALM) report earnings.

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