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Stock Market Preview for 02/18/2011

February 18, 2011

Stock index futures are down in U.S. markets this morning after a mixed session in Asia and a weak start in Europe.

Overnight China raised bank reserve requirements by 50 basis points as part of its attempt to curb speculation.

The Eurozone saw a second day in which the emergency overnight borrowing facility was tapped, raising fears that a new aspect of the crisis may be presenting itself. Banking stocks were weak as a result and the euro dropped against the dollar.

JDSUThe weekend G-20 meeting already appears to be in serious doubt as to the forging of any agreements. The countries are expected to argue about how to gauge imbalances as well as general monetary policy. Traders may actually take a divided G-20 as somewhat good news because it would likely mean that the status quo will be maintained.

In currency trading, the dollar rebounded from recent lows largely because of the declining euro. The basket was mixed, with the U.K. pound and Canadian dollar stronger against the dollar. The Swedish krona and Swiss franc were weak.

Commodity prices were mixed, with copper continuing to decline from recent highs. Crude declined fractionally, and agricultural products were mixed. Silver continued to outpace gold as traders appear to favor the less-expensive metal for hedging.

Campbell Soup missed consensus earnings estimates this morning, sending its stock down 3 percent.

JDSU shares are off 4.5 percent after a downgrade at Citigroup and another from Bernstein a few days ago. Citi took its action last night after the company’s analyst day in San Francisco, and the stock is one of the most active in the early pre-market.

Brocade shares are trading up nearly 9 percent following the company’s earnings report after market close yesterday.

With U.S. markets closed for holiday on Monday, earnings reports will be compressed into a shorter time frame. As a result, Tuesday will be a relatively busy day.

Among the S&P 500 companies reporting that day will be Ameren, Cabot Oil & Gas, Expeditors International, Home Depot, Hormel Foods, Macy’s, and Wal-Mart. Hewlett-Packard will report in the after-market, and that will be an important stock for tech traders.

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