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Stocks May Move Modestly Higher In Early Trading - U.S. Commentary


After moving modestly higher over the course of the previous session, stocks could see some further upside in early trading on Tuesday. The major index futures are currently pointing to a modestly higher open for the markets, with the Dow futures up by 28 points.

The upward momentum for the markets is partly due to some upbeat economic news out of Germany, with a report from the ZEW Center for European Economic Research showing a bigger than expected improvement in German investor confidence.

The report showed that the expectations index climbed to a positive 6.9 in December from a negative 15.7 in November, turning positive for the first time since May. The current conditions index edged up to 5.7 from 5.4.

Futures held onto their gains following the release of a separate report from the Commerce Department showing that the U.S. trade deficit came in narrower than expected in the month of October.

The Commerce Department said the U.S. trade deficit widened to $42.2 billion in October from a revised $40.3 billion in September. Despite the increase by the size of the deficit, it still came in narrower than the $42.8 billion deficit forecast by economists.

Not long after the open, the Commerce Department is due to release a separate report on wholesale inventories in the month of October. Economists expect inventories to increase by 0.4 percent.

Traders are also likely to keep an eye on developments in Washington amid a report from the Wall Street Journal indicating that negotiations between the White House and Republican House Speaker John Boehner have progressed steadily in recent days.

Citing people familiar with the matter, the Journal said the talks have taken a marked shift in recent days, becoming more "serious."

Nonetheless, trading activity is likely to be somewhat subdued as traders look ahead to the Federal Reserve's monetary policy announcement on Wednesday.

Stocks saw modest strength during trading on Monday, although buying interest remained relatively subdued. Positive sentiment generated by upbeat data from China was partly offset by political uncertainty in Italy.

The major averages ended the day in positive territory but well off their highs for the session. The Dow edged up 14.7 5 points or 0.1 percent to 13,169.88, the Nasdaq rose 8.92 points or 0.3 percent to 2,986.96 and the S&P 500 inched up 0.48 points or less than a tenth of a percent to 1,418.55.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday. Hong Kong's Hang Seng Index and Australia's All Ordinaries Index rose by 0.2 percent and 0.4 percent, respectively. However, Japan's Nikkei 225 Index bucked the uptrend and edged down by 0.1 percent.

The major European markets also moved to the upside on the day. The U.K.'s FTSE 100 Index has inched up by 0.1 percent, while the German DAX Index is up by 0.5 percent and the French CAC 40 Index is up by 0.8 percent.

In commodities trading, crude oil futures are climbing $0.52 to $86.08 a barrel after falling $0.37 to $85.56 a barrel on Monday. Gold futures are edging up $0.20 to $1,714.60 an ounce. In the previous session, gold rose $8.90 to $1,714.40 an ounce.

On the currency front, the U.S. dollar is trading at 82.34 yen compared to the 82.36 yen it fetched at the close of trading on Monday. Against the euro, the dollar is trading at $1.2991 compared to yesterday's $1.2941.

by RTTNews Staff Writer

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