The major U.S. index futures are pointing to a higher opening on Wednesday, with sentiment getting a boost from positive global cues. The European markets are seeing a strong advance after Portugal successfully completed its bond auction. Relief over alleviation of troubles faced by debt-ravaged European nations could bring about some cheer in the markets. Commodity prices are continuing to rally in reaction to this development.

U.S. stocks closed mostly higher on Tuesday, helped by optimistic expectations concerning earnings and some comfort over the turn of events related to the European debt crisis. Japan showed its benevolence by pledging to buy European bonds. Commodity prices also rose amid the weakening of the dollar.

The major averages opened moderately higher and moved sideways until late afternoon trading. Thereafter, a wave of selling resulted in the major averages trimming most of their gains. However, the averages moved back to the upside in late trading to close modestly higher.

The Dow Industrials added 34.43 points or 0.30% to end at 11,672 and the Nasdaq Composite Index ended 9.03 points or 0.33% higher at 2,717, while the S&P 500 Index closed up 4.73 points or 0.37% at 1,275.

Eighteen of the thirty Dow components ended higher, with Wal-Mart (WMT), Chevron (CVX), American Express (AXP), Bank of America (BAC), Home Depot (HD), Hewlett-Packard (HPQ) and Intel (INTC) closing notably higher. On the other hand, Alcoa (AA) shed close to 1% despite reporting forecast-beating results and Verizon (VZ) and AT&T (T) fell over 1.50% each after AT&T lost its privilege of being the exclusive carrier for Apple’s (AAPL) iPhone.

Among the sector indexes, the Dow Jones U.S. Basic Materials Average gained 1.16%, the NYSE Arca Oil Index climbed 1.63%, the Philadelphia Oil Service Index added 1.65% and the NYSE Arca Gold Bugs Index rose 2.21%. Additionally, the Philadelphia Housing Sector Index moved up 1.65% and the NYSE Arca Networking Index rose 1.03%. However, the NYSE Arca Airline Index fell 1.29%.

On the economic front, the results of the 3-year note auction were uneventful, with the bid-to-cover ratio at 3.06, below the 12-month average, and the high yield also coming in soft.

The Commerce Department’s wholesale inventories report showed that wholesale inventories declined by 0.2% month-over-month in November compared to expectations for a 1% increase. The decline was due to a 1.8% drop in the inventories of computers and a 0.9% drop in non-durable goods inventories such as groceries and medical drugs. Meanwhile, wholesale sales rose 1.9%. Consequently, the wholesale inventory to sales ratio declined to 1.15 in November from 1.17 in October, marking the lowest level since June 2010.

Currency, Commodity Markets

Crude oil futures are trading up $0.54 at $91.65 after ending up $1.86 to $91.11 a barrel on Tuesday. An ounce of gold is currently fetching $1,381.90, down $2.40 from its previous session’s close of $1,384.30. In the previous session, the precious metal rose $10.20 an ounce.

Among currencies, the U.S. dollar is trading at 83.3575 yen compared to the 83.2385 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.3021 compared to yesterday’s $1.2974.

Asia

The major Asian markets saw some strength on Wednesday, as the positive close on Wall Street and the rebound in commodity prices helped to generate buying interest. However, the strengthening of the domestic currencies restricted the gains.

Japan’s Nikkei 225 opened notably higher, but the index surrendered its gains over the course of the session to close up 2.12 points or 0.02% at 10,513. Financial and real estate stocks saw noteworthy gains, with Mitsubishi UFJ, Mitsubishi UFJ, Mitsui Fudosan, Mizuho Trust and Banking, Resona Holdings, Shinsei Bank and Sumitomo Realty among the biggest gainers.

In economic news, Japan’s Ministry of Finance reported that Japan’s current account surplus came in at 926.2 billion yen in November, notably lower than the 1.436 trillion surplus recorded in October. Economists had estimated a surplus of 972.5 billion yen. The decline in the current account surplus was mainly due to the shrinkage in the trade surplus to 259.7 billion yen from 912.9 billion yen in October. A separate report released by the Bank of Japan showed that bank lending fell 2.1% year-over-year in December following a decline of the same magnitude in November.

Australia’s All Ordinaries, which showed modest gains in the morning, advanced notably in the mid-session before consolidating its gains thereafter. The index closed up 17 points or 0.35% at 4,832. Material and energy stocks held the markets together, while most other sector stocks declined.

Loans extended by banks to households in Australia rose for the fifth month running in November despite the central bank raising interest rates, a report released by the Australian Bureau of Statistics showed. Housing finance commitments for owner-occupied housing rose 2.5% month-over-month to a little over 50,500. Economists had forecast a 1% drop after the 2.2% increase in October.

Hong Kong’s Hang Seng Index opened moderately higher and moved sideways in the morning. Buying interest picked up in the afternoon and lifting the index sharply higher. The index closed up 365.27 points or 1.54% at 24,126. China-related stocks, financial and property stocks ended mostly higher.

Europe

The major European markets are also trading higher on Wednesday, with the French CAC 40 Index and the German DAX Index rising 1.56% and 1.49%, respectively, while the U.K.’s FTSE 100 Index is advancing 0.46%.

In corporate news, Sainsbury reported 3.6% same sales growth, excluding fuel, for the fourteen weeks ended January 8th. U.K. homebuilder Barratt said its average selling price for the six months ended December 2010 rose 6% to 176,000 pounds. However, sales are likely to be flat with last year.

Meanwhile, Airbus, owned by Paris-listed EADS, secured the biggest contract in terms of the number of aircraft in aviation history. The contract calls for the company to supply 180 A320 aircraft worth $15.6 billion to India’s low cost airline Indigo.

The results of a survey by the British Retail Consortium showed that shop price annual inflation in the U.K. rose to 2.1%, a pick up from the 2% pace in the previous month.

A Bank of France report showed that the French current account deficit widened to 4.2 billion euros from a 2.8 billion euro-deficit in October. The trade deficit widened by about 1 billion euros to 4.5 billion and the surplus on the services account shrunk to 0.2 billion euros from 0.7 billion in October.

The German Federal Statistical Agency released GDP estimates for 2010 that showed a solid 3.6% GDP expansion following a 4.7% GDP decline in 2009. On a calendar-adjusted basis, GDP growth was 3.5%.

Eurostat reported that industrial output of the euro zone region rose 1.2% month-over-month in November following a more modest 0.7% increase in October. On a year-over-year basis, factory output climbed 7.4%, better than the 5.9% growth forecast by economists.

Meanwhile, hurt by higher oil imports, U.K.’s trade balance widened in November, according to a report released by the U.K. Office for National Statistics. U.K.’s visible trade balance widened to 8.73 billion pounds from a deficit of 8.59 billion pounds in the year-ago period.

U.S. Economic Reports

With the price of fuel imports to the U.S. showing another substantial increase in the month of December, the Labor Department released a report showing another notable increase in total import prices. The report also showed a moderate increase in total export prices.



The Labor Department said that import prices rose by 1.1% in December following a 1.5% increase in November. Excluding a 4.1% increase in prices for fuel imports, imports prices increased by a much more modest 0.3%.

Additionally, the report showed that export prices increased by 0.7% in December after rising by 1.5% in the previous month. Export prices increased by a slightly more modest 0.6% excluding a 1.7% increase in prices for agricultural exports.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended January 7th at 10:30 AM ET.


Crude oil stockpiles fell by 4.2 million barrels to 335.3 million barrels in the week ended December 31st. Despite the decline, inventories remained above the upper limit of the average range.

Gasoline inventories rose by 3.3 million barrel, remaining in the upper half of the average range. Distillate stockpiles rose by 1.1 million barrels and were above the upper limit of the average range. Refinery capacity utilization averaged 88% in the week ended December 31st compared to 87.8% in the previous week.

The Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts, at 2 PM ET. The report is normally released about two weeks before the monetary policy meeting is held.

The Treasury Budget, a monthly account of the surplus or deficit of the federal government, is due to be released at 2 PM ET. The budget is considered an indicator of budgetary trends and the thrust of fiscal policy.

Stocks in Focus

Earnings

HB Fuller (FUL) reported that its fourth quarter net income fell to 44 cents per share from 50 cents per share last year. The recent quarter’s results included one-time charges amounting to 5 cents per share. Net revenues rose 5.5% to $360.2 million. Analysts estimated earnings of 40 cents per share on revenues of $363 million. The company also said it expects 2011 revenues to increase by 8% to 10% and earnings per share of $1.75-$1.85. The consensus estimates call for earnings of $1.55 per share on revenue growth of 10.10%.

Other Corporate News

Arch Coal (ACI) could come under selling pressure after it lowered its 2010 adjusted earnings estimate to $1.11 to $1.15 per share from its earlier guidance of $1.25-$1.40 per share. Analysts estimate earnings of $1.17 per share for the year. The company attributed the tempered outlook to lower shipments, reflecting poor Eastern rail service, and a hit to production due to geologic challenges in its Mountain Laurel operation.

Level 3 Communications (LVLT) is likely to see some weakness after it said it has agreed to sell $305 million aggregate principal of its 11.875% senior notes due 2019 in a private offering.

Another stock that could react to an offering is O’Reilly Automotive (ORLY), which said it has priced $500 million worth of senior notes due 2021 at 99.297% of their face value.

Genesco (GCO) could move to the upside after it announced that its same store sales for the fourth quarter rose 9%. Citing the stronger than expected sales, the company raised its adjusted earnings outlook for the quarter to $1.25-$1.30 per share and for the year to $2.40-$2.45 per share. The consensus estimates call for earnings of $1.28 per share for the quarter and $2.44 per share for the year.

RailAmerica (RA) may see some activity after it said its total freight carloads rose 4% year-over-year in December to 71,209.

Chevron (CVX) could move in reaction to its announcement that its fourth quarter earnings are expected to be higher than in the third quarter, as its upstream business benefited from higher oil prices and increased liquids liftings and its downstream earnings were helped by a gain on an asset sale.

Cliff Natural Resources (CLF) is likely to see weakness after it said it has agreed to buy all outstanding shares of Consolidated Thompson Iron Mines in an all cash deal valued at C$4.9 billion, including the assumption of debt. The transaction, which is expected to close early in the second quarter of 2011, is likely to be modestly accretive to Cliff’s earnings per share and cash flow in 2011.

Dow Chemicals (DOW) and DuPont (DD) are likely to be in focus after Dow AgriSciences, a unit of Dow, said the companies have resolved a dispute regarding the marketing of certain corn seed products. The settlement provides for Dupont’s unit to distribute the seeds with modified packaging.

Zale (ZLC) may see some activity after it said its comparable store sales for the month of November and December rose 8.5%. For the two months, revenues were $533.1 million compared to $493.7 million last year.

AIG (AIG) may react to its announcement that it has agreed to sell its 97.57% stake in Taiwanese unit Nan Shan Life Insurance to Ruen Chen Investment for $2.16 billion in cash.

Big 5 Sporting Goods (BGFV) said its fourth quarter net sales fell to $226.7 million from the year-ago’s $237.6 million, missing the consensus estimate of $235.95 million. Same store sales were also down 0.7%. The company updated its earnings outlook and now expects fourth quarter adjusted earnings of 23-25 cents per share and full year adjusted earnings of 99 cents to $1.01 per share. Analysts estimate earnings of 30 cents per share for the quarter and $1.06 per share for the year.