OVERNIGHT MARKETS AND NEWS

March E-mini S&Ps (ESH16 +0.38%) are up +0.54% and European stocks are up +0.73% on optimism the U.S. economy is strong enough to handle an expected interest rate increase by the Fed today. The markets are expecting the FOMC to raise the federal funds rate by 25 bp and to reiterate that any subsequent rate hikes will be gradual as long as economic growth remains steady. European stocks found support on strength in manufacturing activity after the Eurozone Dec Markit manufacturing PMI climbed at the fastest pace in over 1-1/2 years. Asian stocks settled higher: Japan +2.61%, Hong Kong +2.01%, China +0.17%, Taiwan +1.38%, Australia +2.42%, Singapore +0.90%, South Korea +1.96%, India +0.69%.

The dollar index (DXY00 +0.02%) is down -0.01%. EUR/USD (^EURUSD) is down -0.08%. USD/JPY (^USDJPY) is up +0.19%.

Mar T-note prices (ZNH16 -0.06%) are down -3 ticks.

The German Dec Markit/BME manufacturing PMI rose +0.1 to 53.0, stronger than expectations of -0.1 to 52.8.

The Eurozone Dec Markit manufacturing PMI rose +0.3 to 53.1, stronger than expectations of no change at 52.8 and the fastest pace of expansion in 20 months.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous +1.2% with purchase sub-index unch and refi sub-index +3.5%), (2) Nov housing starts (expected +6.6% to 1.130 million, Oct -11.0% to 1.060 million), (3) Nov industrial production (expected -0.1% m/m, Oct -0.2%) and Nov manufacturing production (expected unch m/m, Oct +0.4%), and (4) today's end of the 2-day FOMC meeting where the FOMC is expected to raise the funds rate target by +25 bp to 0.25%-0.50% range from 0.00%-0.25%.

There are 4 of the Russell 1000 companies that report earnings today: FedEx (consensus $2.50), Oracle (0.60), Jabil Circuit (0.80), Joy Global ($0.41).

U.S. IPO's scheduled to price today: none.

Equity conferences: European Society for Medical Oncology Asia Congress on Fri.

OVERNIGHT U.S. STOCK MOVERS

Chevron (CVX +3.84%) was raised to 'Buy' from 'Hold' at Argus Research.

Boyd Gaming (BYD +2.32%) was upgraded to 'Buy' from 'Hold' at Deutsche Bank.

Northrop Grumman (NOC +0.41%) was upgraded to 'Overweight' from 'Neutral' at JPMorgan Chase.

Newell Rubermaid (NWL +4.70%) was raised to 'Top Pick' from 'Outperform' at RBC Capital Markets with a 12-month price target of $60.

Valeant Pharmaceuticals (VRX +16.41%) fell over 5% in pre-market trading after it lowered guidance on Q4 adjusted EPS to $2.55-$2.65 from a prior forecast of $4.00-$4.20.

General Dynamics (GD -0.83%) was downgraded to 'Neutral' from 'Overweight' at JPMorgan Chase.

ConAgra Foods (CAG +0.81%) was rated a new 'Buy' at Jeffries with a price target of $50 and WhiteWave Foods (WWAV +3.04%) was also rated a new 'Buy' at Jeffries with a price target of $44.

Advanced Auto Parts (AAP +5.80%) rose over 1% in after-hours trading after StreetInsider, citing one unidentified person, reported the company was exploring a possible sale.

Dover (DOV +0.10%) slid over 3% in after-hours trading after the company lowered guidance on 2015 EPS continuing operations to $3.62 from a prior estimate of $3.73-$3.80, below consensus of $3.74.

AMC Entertainment Holdings (AMCX +2.43%) moved up over 1% in after-hours trading after the company named Starwood Hotels & Resorts interim CEO, Adam Aron, as the new CEO of AMC.

Heico (HEI +1.81%) rose over 4% in after-hours trading after it reported Q4 adjusted EPS of 56 cents, higher than consensus of 53 cents.

Ascent Retail Group (ASNA -2.21%) rallied nearly 5% in after-hours trading after the company reported a new $200 million stock buyback program.

Heartland Payment (HPY +2.82%) jumped nearly 12% in after-hours trading after Global Payments GPN said it will acquire the company for about $4.3 billion.

MARKET COMMENTS

Mar E-mini S&Ps (ESH16 +0.38%) this morning are up +11.00 points (+0.54%). Tuesday's closes: S&P 500 +1.06%, Dow Jones +0.90%, Nasdaq +0.59%. The S&P 500 on Tuesday closed higher on the +6.15 point increase in the Dec Empire manufacturing index (stronger than expectations of +3.74 to -7.00) and on strength in energy producing stocks after crude oil rallied.

Mar 10-year T-notes (ZNH16 -0.06%) this morning are down -3 ticks. Tuesday's closes: TYH6 -10.50, FVH6 -6.75. March T-notes on Tuesday fell to a 1-week low and closed lower on the +0.5% y/y increase in U.S. Nov CPI (stronger than expectations of +0.4% y/y) and the rally in stocks, which curbs the safe-haven demand for T-notes.

The dollar index (DXY00 +0.02%) this morning is down -0.014 (-0.01%). EUR/USD (^EURUSD) is down -0.0009 (-0.08%). USD/JPY (^USDJPY) is up +0.23 (+0.19%). Tuesday's closes: Dollar Index +0.613 (+0.63%), EUR/USD -0.0061 (-0.55%), USD/JPY +0.65 (+0.54%). The dollar index on Tuesday recovered from a 6-week low and closed higher on the jump in U.S. 10-year T-note yield to a 1-week high, which improves the dollar's interest rate differentials, and on the stronger-than-expected U.S. Nov CPI report of +0.5% y/y which bolsters the case for a Fed interest rate increase.

Jan crude oil (CLF16 -0.67%) this morning is down -24 cents (-0.64%) and Jan gasoline (RBF16 +0.38%) is up +0.0033 (+0.27%). Tuesday's closes: CLF6 +0.43 (+1.18%), RBF6 -0.0112 (-0.89%). Jan crude oil and gasoline on Tuesday settled mixed. Crude oil prices were boosted by expectations that Wednesday's weekly EIA crude inventories will fall -1.5 million bbl and optimism that Congress may lift the 40-year old U.S. crude export ban, thus increasing demand for U.S. oil. Crude oil prices were undercut by a stronger dollar and expectations for Wednesday's weekly EIA gasoline inventories to climb by +1.0 million bbl.

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