Stock Market News for May 26, 2009

Asian stocks declined Tuesday after North Korea test fired two missiles, heightening geopolitical tensions in the region.  The move, coming a day after the communist regime’s nuclear test drew widespread criticism, added to investor worries that the recent rally in stocks may be overdone.  The aftershocks reverberated through the markets on Tuesday with neighboring South Korea’s Kospi declining more than 2%.  The Nikkei 225 Stock Average in Japan edged 0.4% lower.  Benchmarks in India, China, Hong Kong and Taiwan also declined.   

U.S. markets enter the holiday-shortened week with a number of key economic data that is likely to be of market moving potential.  Troubled automaker General Motor’s (NYSE:GM) fate will also be in focus.  Stock futures point to a lower open on the Wall Street.  Dow Jones industrial average futures fell 10, or 0.1%, to 8,250. Standard & Poor's 500 index futures fell 1.40, or 0.2%, to 883.50. Nasdaq 100 index futures declined 9.75, or 0.7%, to 1,351.
    
On Friday, U.S. stocks declined for the third straight session, but ended the week slightly up, as investors appeared concerned with macroeconomic factors.  Volume on the exchanges remained weak as investors looked for fresh catalysts to help restart a rally.  The greenback slipped to its lowest level in five months against a basket of currencies as its safe haven appeal came under scanner following S&P’s placement of the UK under negative watch for its heavy issuance of public debt.  A spike in oil prices also hurt the dollar, as higher oil prices reflected likely improved demand scenarios. 

Treasury yields Friday rose to six-month highs on the 10-year.  Treasury action this week includes today's auction totaling $40 billion in 2-year notes, $35 billion in 5-years expected Wednesday, and $26 billion in 7-years on Thursday.

Although Philadelphia Fed President Plosser opined the Fed's various stimulus packages have opened the door to inflation, Treasury Secretary Geithner sounded more optimistic, noting the Administration’s dedication to control the fiscal deficit. 

The failure of Florida’s largest bank, BankUnited, also hurt financials last week.  However, Morgan Stanley (NYSE:MS - Snapshot Report) raised its price target for Bank of America (NYSE:BAC - Analyst Report) to $32 from $25, but reiterated its "overweight" rating.  Shares of American International Group Inc. (AIG) also declined Friday after Chairman and CEO Edward Liddy announced that he would step down from his position as soon as the company finds a replacement.

Corporate earnings slow to a trickle this week.  Among the few key companies to report are: Costco (NASDAQ:COST - Snapshot Report), Dell (NASDAQ:DELL - Analyst Report), Staples (NASDAQ:SPLS - Snapshot Report), and Tiffany (NYSE:TIF - Analyst Report).