Welcome to Wednesday’s Morning Coffee Break – Yesterday’s rally of triple digits on the Dow Jones Industrial and over 14 points in the S&P 500 has put U.S. markets back in the green for the month of October, just 8 session before Friday’s 25th anniversary of the 1987 stock crash.

U.S. equity futures are flat this morning as market participants look towards Bank of America (BAC, quote) along with other large banks like U.S. Bancorp (UBS, quote) earnings reports after disappointing revenue growth from International Business Machines (IBM, quote) and Intel Corp (INTC, quote) although results were basically inline it was the outlook from Intel’s CEO, Paul Otellini, that cast a black shadow over Intel.  Mr. Otellini said Intel’s profits are being hurt by declining personal computer sales; he also went on to say that economic conditions remain tough.

The economic calendar is light today with the Housing Starts Report due out at 8:30 a.m. ET. analysts’ are looking for 2.4% increase of the annual rate of 768k in units.

The other key report today will come from the Department of Energy with a look at WTI crude oil and gasoline inventories due out at 10:30 a.m. ET.  The report will help market participants assess economic growth.

As traders start out their day – The Dow Jones  (DIA, quote) fair value is down by -19.78 to 13460.00, S&P 500 (SPY, quote) fair value is up by 1.73 to 1451.3 and the NASDAQ (QQQ, quote) fair value is coming in at 2763.75 down by 8.18 (as of 7:27 a.m.)

Morning Coffee Break Global Markets Watch

Asia

Overnight Asian markets were broadly higher on the session as financial, shippers and resource stocks after positive earnings news from U.S. companies.  Japanese equity markets rallying for the third time in row as Japan’s Prime Minister Yoshihiko Noda reportedly informed his cabinet overnight to prepare a new economic stimulus package for the country and have ready by the end of November.  Reports are suggesting the move is to help with the slowdown being felt in the recovery speed since Japan’s devastating earthquake and tsunami back in March 2011.

Interesting enough Asian markets began to react to the U.S. presidential debate and retreated off the highs on early speculation that President Obama was winning the debate. An early sign of what the markets would do on the outcome of the election.

Euro Zone

The Euro continued its rally against the U.S. Dollar and major pairs this morning when Moody’s ratings agency maintained Spain’s rating one level above junk grade.  Moody’s said it is refrain from cutting Spain’s rating on the fact that the European Central Bank is willing to purchase Spain’s bonds through its bond buying program.

United Kingdom’s stock market received a boost when the government reported unemployment dropped to 7.9%

Emerging Markets

India’s markets did not jump on the U.S. and Euro Zone coat tails as it put in a lackluster session last night.  The Sensex and NIFTY both moved higher with the Sensex gaining more than  100 points early in the session on the U.S. earnings results nut soon after gave up the gains and began to consolidate once again.

Morning Coffee Break Companies To Watch

Company Watch

Best Buy (BBY, quote) reportedly planning to sell its own tablet device.  Price points are reportedly being between $239 to $259 running in the Android.

Apollo Group (APOL, quote) announced plans to close 115 of its University of Phoenix locations.  This comes on the heels of a 60% drop in fiscal fourth quarter profits.

Starbucks (SBUX, quote) could be the focus of a U.K. tax probe.  A senior parliament member is calling for an investigation of why Starbucks was able to avoid paying U.K. taxes since 2009.

Ford (F, quote) to recall 262,000, 2011-2013 models Fiesta subcompacts in order to address an issue with the programming of passenger side airbags.

Futures and Commodities Corner

Crude Oil

Oil prices moved higher during European sessions after Moody’s decision to keep Spain just above junk status and not lower the countries debt rating.  Risk appetite is shifting sentiment once again towards the riskier side and in turn in is helping to support oil prices.  All eyes will be on the inventory numbers due out at 10:30 a.m. ET. today.

Be sure to check out the Daily Energy Report for a compressive look at the global energy markets by Tom Pawlicki.

Equity only readers can gain exposure to WTI Crude Oil through the United States Oil Fund (USO, quote) ETF that seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The USO will invest in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. It may also invest in other oil interests such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil.

For natural gas traders can gain exposure through the United States Natural Gas Fund (UNG, quote) ETF that seeks to replicate the performance, net of expenses, of natural gas. The trust will invest in futures contracts on natural gas traded on the NYMEX that is the near month contract to expire.

Gold

Gold prices are lower today on the Moody’s news as well. Prices moved lowered as the blanket of calm covered the region; the question is for how long. The Euro rally against the majors including the U.S. dollar which has help to keep the price from falling to hard.

Equity only readers gain exposure to the gold through the SPDR Gold Shares Trust (GLD, quote) ETF that seeks to replicate the performance, net of expenses, of the price of gold bullion. The GLD trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets.

 

Crude Oil	$92.41	+0.32	+0.35%
Gold	$1749.90	+5.20	+0.30%
Wheat	$851.75	+4.00	+0.47%
Corn	$740.50	+2.25	+0.30%
Live Cattle	$126.675	UNCH	UNCH
Lean Hogs	$78.60	UNCH	UNCH
Treasury Bond	147.375	-0.8125	-0.55%
10yr Note	132.5625	-0.3125	-0.24%
2yr Note	110.1875	-0.0078	-0.01%
U.S. Dollar Index	79.025	-0.44	-0.55%
			As of 8:36.m. ET

The Morning Coffee Break Bottom Line

U.S. futures are suggesting a mixed open with only the S&P 500 slightly higher in the pre-market this morning on this session for the week. With housing starts and building permits both beating estimates and future still lower before the open suggest market participants are worried about something else or what would be nice is to see some profit taking from this stealth rally and get a nice healthy pullback providing entry points in sold names once again.

A pull back on the tail end or right after earnings is not necessary bad as we would have just heard from all those CEOs and CFOs on the health status of their firms.

As always keep an eye on Currency Shares Euro Trust (FXE, quote) it’s has been good indicator on the direction of U.S. Markets.  Watch it close to day see if it begins to lose momentum.