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Pre-Market Primer: Stocks Rise Ahead of Day Two of Bernanke Testimony


As the chaos drags on in Italy, the country is still able to sell debt.

Stocks are looking up ahead of a second day of testimony from the Federal Reserve Chairman as the political deadlock in Italy drags on.

Before the opening bell, Dow (INDEXDJX:.DJI) futures are up 0.25% at 13,895. Futures on the S&P 500 (INDEXSP:.INX) rose 0.27% to 1,496.50 and Nasdaq (INDEXNASDAQ:.IXIC) futures climbed 0.25% to 2,714.50.

Durable goods orders in January fell 4%. Excluding transportation, orders gained 0.2%

Economists predicted that orders will shrink 4.7% after growing 4.3% in December 2012. Later this morning, pending home sales data will be released. Sales are expected to rise 3% in January after slipping 4.3% in the month prior.

Yesterday, markets cheered Fed Chairman Ben Bernanke's report to the Senate where he confirmed that he is firmly in favor of continuing $85 billion worth of asset purchases per month despite his peers' protests that appear in FOMC minutes. He said that the benefits of the program are clear and the risks are "not of sufficient concern that they outweigh the important benefits of trying to support a continued recovery."

"Monetary policy is providing important support to the recovery while keeping inflation close to the FOMC's 2% objective," Bernanke said.

This morning, Bernanke will testify before the House Financial Services Committee.

Amidst Italy's stalemate and lack of a viable government, ratings agency Moody's warned that it might downgrade Italy's sovereign debt "in the event of additional material deterioration in the country's economic prospects or difficulties in implementing reform." If Beppe Grillo and his anti-austerity cohorts are able to influence the direction of the country enough, this seems likely.

The country's short-term bond yields rose at an auction yesterday, but a longer-term debt sale went better than expected today. Yields are still up from previous auctions but not at an unsustainable level. Italy sold 4 billion euros of 10-year bonds at an average yield of 4.83%, up from 4.17%. Five-year yields rose to 3.59% from 2.94%. Demand for the bonds actually rose.

Eurozone economic confidence rose to 91.1 this month from 89.5 in January. Economists expected a slightly more modest increase.

The UK's GDP was confirmed as down 0.3% in the fourth quarter of 2012. For the full year, the economy grew by 0.3%, besting estimates of zero growth. Japan's retail sales fell 1.1% on an annual basis in January after rising 0.4% in December.

Priceline (NASDAQ:PCLN) shares rose 4.20% before the bell after the company reported earnings that beat analyst expectations. PCLN's fourth quarter profit jumped 26% to $6.77 per share. The online travel agency's revenue rose 20% to $1.19 billion.

Anheuser-Busch InBev (NYSE:BUD) shares climbed 0.8% after announcing that fourth quarter earnings beat expectations. EBITDA profits rose 9.9% to $4.39 billion. Adjusted sales rose 8.8%. Profit could be lower this quarter due to cold weather in the US and an early Carnival in Brazil. AB InBev is currently working on a settlement with the US Department of Justice to finalize its takeover of Mexico's Grupo Modelo (PINK:GPMCF), buying the half of the company that it doesn't already own.

Groupon (NASDAQ:GRPN) could be active today before it issues its earnings report at the market close. Analysts are expecting a profit of $0.03 per share with revenue up 26% to $638.41 million.

Twitter: @vincent_trivett
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