After three days of gains, US equities are looking to start lower on Tuesday ahead of trade balance data for February.

The caution is partly attributed to poor results late yesterday from Alcoa, who tipped off the Q1 earnings seasons by posting a loss of $201 million. The nation’s largest aluminum producer saw revenue advance by 18% in the quarter, but analyst expectations were even rosier. 

Also in the headlines is commentary that President Obama’s meeting with Chinese counterpart Hu Jintao didn’t go so well. Reuters reported that “Sino-U.S. tensions over the yuan threatened to escalate into a serious trade dispute,” and that “China would not be pushed by external pressure and would instead base any decision on the yuan on its own economic needs.”

90 minutes before the opening bell, Dow futures are down 21 points to 10,931 and S&P 500 futures are down 2.75 points to 1,189.75. The 2 year Treasury note is unchanged at 99-30 yielding 1.032% while the 10 year note is +0-02 at 98-10 yielding 3.832%.

Commodity prices are also lower. NYMEX crude oil has fallen for five consecutive days and this morning is trading 67 cents lower to $83.67 per barrel. Meantime, Gold is slumping by $7.90 to $1,154.30.

Key Events Today:

8:30 ― Expect the Trade Balance to widen its deficit from $37.3 billion in January to $39 billion in February, economists say. Exports and imports are both expected to rise as the global economy continues to recover, but imports are expected to rise more rapidly. 

Not all economists agree, however. Analysts at Nomura look for the gap to narrow to $37 billion as exports may have jumped more than others anticipate. “A rebound of capital goods shipments in particular points to strong demand for US products overseas,” they said.

Deutsche Bank economists are similarly optimistic and expect the report to back up their estimate of 4.5% GDP growth in the first quarter. “Surging exports are one of the key reasons growth was so strong last quarter, so if there is an upward surprise in the data, consensus forecasts could be revised significantly higher.”

12:00 ― The House Financial Services Committee holds a hearing to discuss "Second Liens and Other Barriers to Principal Reduction as an Effective Foreclosure Mitigation Program"

7:15pm ― Jeffrey Lacker, president of the Richmond Fed, speaks on the economic outlook to West Virginia business leaders in Morgantown, WV. Q&A to follow.

Treasury Auctions:


  • 11:30 ― 4-Week Bills