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Pre-Market Primer: Stocks Rise on Hopes of Monetary Easing


Some Fed-watchers are expecting Ben Bernanke to announce some more policy easing this morning.

MINYANVILLE ORIGINAL Investors are hoping that Ben Bernanke will discus further monetary easing in his testimony before the Senate Banking Committee today. US index futures are up this morning on hopes that the Fed chief will see the recent plunge in retail sales and consistently high unemployment as reason enough to do more than just extend Operation Twist. A more dovish course could spur a stock rally later today.

Today, more economic indicators showed favorable conditions for more monetary easing. Inflation in June didn't even budge. The Consumer Price Index showed zero growth after falling 0.3% in May. Excluding energy and food prices, inflation was a tame 0.2%. Lower oil prices have kept inflation down. Today, WTI futures are up 0.33% at $88.72/barrel.

The US Housing Market Index is expected to show a gain to 30 from 29 in July and economists expect the June Industrial Production report to show a 0.3% rise after falling 0.1% in May.

Before the opening bell, futures on the Dow (^DJI) were up 0.42% at 12,701, while S&P 500 (SPY) futures rose 0.48% to 1,353.90 and Nasdaq (^IXIC) futures gained 0.51% to 2,584.50.

While government debt yields worldwide are falling today, with US five-year Treasury notes at a record low yield, Moody's downgraded the credit of 13 Italian banks including units of Intesa Sanpaolo (ISNPY) and Unicredit (UNCFF). The move comes following "the weakening of the Italian government's credit profile, as captured by Moody's downgrade of Italy's government bond rating to Baa2 from A3, with a negative outlook." Business conditions in Germany are also deteriorating, according to the ZEW index of economic sentiment, which fell 2.7 points to 19.6 points, below the historical average of 24.

"The decline of the economic expectations concerning the end of 2012 is flattening out gently. This could possibly be an early sign of an encouraging development in 2013. However, risks should not be underestimated. Besides the weak demand from the eurozone for German exports, the German economy is also burdened by weakening growth dynamics in other important partner countries," said ZEW President Wolfgang Franz.

Yahoo (YHOO) unexpectedly poached Marissa Mayer from Google (GOOG) to take over as CEO. An engineer by background, Mayer was in charge of Google's Places, Maps, and Earth products. She also sits on the board of Wal-Mart (WMT). Mayer will be the fifth acting chief executive officer of Yahoo in just one year. Today, she takes over after interim CEO Ross Levinsohn, who has been acting as CEO in place of Scott Thompson, who resigned in a scandal over his false credentials.

Yahoo will report earnings after the bell today, as will Intel (INTC). Yahoo is expected to report earnings of $0.23 per share on $1.1 billion in revenue, up from $0.18 per share in the previous quarter. Intel's situation is a bit less rosy. Earnings are expected to fall to $0.52 from $0.54 while revenue is expected to rise to $13.56 billion. Weakening PC sales, a lack of a toehold in the mobile space, and poor economic performance in European and Asian markets are seen as wearing on Intel's bottom line.

Twitter: @vincent_trivett
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