A day after the Dow Jones Industrial Average dropped 201 points, the blue-chip index appears set to recover at least some of those losses. Stocks looked to open higher, as traders welcomed a stable U.S. credit rating and a leveling off of commodities prices. Shortly before 7:30 a.m., Dow, Nasdaq and S&P 500 futures were trading above fair value.
The mood improved on Wall Street after Moody's Investors Service said the U.S. would maintain its triple-A credit rating, despite heavy borrowing in an effort to stimulate the economy, Reuters reported. Moody's projects the rating will remain static for at least the next 18 months.
A slowdown in the decline of commodities prices also help pull the market out of a freefall. Oil prices were fairly flat in early trading. By 7:07 a.m., crude traded down 26 cents at $67.24 a barrel.
In Washington, the Federal Reserve is heading into its two-day meeting on monetary policy. The Fed is widely expected to leave the federal funds rate flat at 0.00% to 0.25%, but traders will be watching for hints of language hinting at inflation that could signal a change in the foreseeable future.
Also in Washington, the Obama administration continues to enjoy a strong approval rating (65%), according to the results of the latest Washington Post-ABC News poll, but American patience with the White House and its ability to handle the economic crisis is slipping. The new survey suggests the percentage of Americans that believe the stimulus package will draw the country out of a recession has declined to 52%, down from a prior reading of 59%.
World markets were mixed. Asia took a hit in the wake of the U.S. selloff. Japan's Nikkei dropped 2.8%, while Hong Kong's Hang Seng gave up 2.9%. In Europe, the U.K.'s FTSE picked up 0.3% in afternoon trading.
Corporate News
UBS (UBS: 12.52, -0.73, -5.50%) may have successfully lobbied its way out of releasing the names of 52,000 of its American clients to the U.S. government, The New York Times reported. A Justice Department investigation had threatened to expose the bank's American customers in an effort to uncover instances of tax evasion, but Washington appears to be easing in light of Swiss laws that would render UBS bankers guilty of violating a code of secrecy between themselves and their clients.
Ford (F: 5.38, -0.34, -5.94%), Nissan and Tesla Motors are among the automakers receiving some of the first loans from a new $25 billion federal lending program designed to help car companies update their factories to produce more environmentally sound vehicles, The Wall Street Journal reported, citing anonymous sources. The loans are part of a program created by Congress to encourage companies to make vehicles 25% more fuel-efficient than 2005 models.
Toyota (TM: 74.67, -1.94, -2.53%) installed Akio Toyoda, the grandson of the company's founder, as the firm's new president. Toyota, the world's largest automaker, is mired in a global slump that sank American rivals General Motors and Chrysler into bankruptcy and steered the company toward a record annual loss.
The Economy
The May reading of the annual rate of existing home sales is scheduled to be released at 10 a.m. by the National Association of Realtors. In April, the annual rate stood at 4.68 million sales. For May, economists expect the rate to have risen to 4.82 million sales a year.
