U.S. AVERAGES
Oil rose to a record high above $64 a barrel early Tuesday as traders were worried about the potential for Middle East supply disruptions that could add tension to a market already hit by refinery problems.
U.S. Treasury notes were little changed before the Federal Reserve's meeting on interest rates, at which policy makers will probably raise their benchmark rate for the 10th straight time.
The yield on the benchmark 10-year note was 4.42%. The yield has climbed from 3.92% at the end of June. The price of the 4 1/8 percent security due May 2015 gained 1/32, or 31 cents per $1,000 face amount, to 97 11/16. Yields move inversely to bond prices.
Ford Motor Co. (
F: chart) late Monday said it would cut an unspecified number of jobs in North America. According to reports, as many as 20% to 25% of sales and marketing staff could be cut.
Before the start of trading,
King Pharmaceuticals (
KG: chart) is expected to see its quarterly profit rise to 22 cents per share.
Clear Channel Communications (
CCU: chart),
El Paso (
EP: chart) and
Progressive Corp. (
PGR: chart) are all expected to announce their quarterly results Tuesday.
Investors also expect earnings reports from two high profile companies after the closing bell Tuesday - tech bellwether
Cisco Systems and media and entertainment conglomerate
Walt Disney. Both are seen to post double-digit percentage jumps in earnings.
ECONOMIC NEWS
No surprises are expected when Federal Reserve policy makers meet Tuesday, as they are likely to raise short-term interest rates another quarter of a percentage point, to 3.5%. The word in the statement is seen a bit more hawkish on the outlook for inflation. An announcement from the Fed is expected at about 2:15 p.m.
Second-quarter non-farm productivity and June wholesale-inventories data are also expected today.
Economists expect a moderate increase in nonfarm productivity to have taken place in the second quarter. Their estimates center on a 2% annual rate of increase after a 2.9% rate of jump in 1Q. Unit labor costs - equal to hourly compensation growth less productivity – are expected to increase at a 2.7% rate vs. a 3.3% pace in 1Q.
The Labor Department is set to release the productivity and costs report today at 8:30 a.m.
The Commerce Department is due to report on wholesale inventories at 10 a.m.
INTERNATIONAL MARKET NEWS
Asian-Pacific markets ended mostly higher on regional oil and energy stock gains after the markets shrugged off record-high crude-oil prices of nearly $64 a barrel. The Nikkei advanced 1%, boosted by better-than-anticipated economic data. Among the gainers in the regional markets, South Korea’s Kospi added 1.2% and China’s Shanghai Composite rose 1.2%. Stocks in Hong Kong declined 0.4%; markets in Singapore were closed for a national holiday.
European markets traded up at mid-day on resource stocks and drug maker Elan, ahead of Fed Reserve interest rate decision later in the day. The new record high of crude-oil prices, $64.24 in electronic trading, sent shares of BHP Billiton and Royal Dutch Shell higher. Averages in Germany rose 0.13%, in France added 0.17%, and in the U.K. advanced 0.10%. Crude-oil was recently traded at $63.75 a barrel.
ENERGY, METALS AND CURRENCIES MARKETS
Crude-oil futures hit historic record prices on terror fears and supply concerns, caused by unusually stormy weather forecasts. Light sweet crude for September delivery rose 17 cents to $64.11 a barrel in New York trading. London Brent gained 10 cents to trade at $62.80.
Gold futures declined in the company of the mixed U.S. dollar. In London gold traded at $434.70 per troy ounce, down from $435.65. In Hong Kong gold fell $2.30 to close at $434.75 per ounce. Silver opened unchanged at $7.06.
The U.S. dollar was mixed against its major counterparts. The euro traded at $1.2372, up from $1.2357. The greenback bought 112.03 yen, up from 112.00. The British pound was quoted at $1.7845, down from $1.7858.
