Tuesday Market Note: China, Earnings, and FinReg

On the heels of a fifth straight winning session for U.S. stocks, European stocks are trading higher, despite Moody's downgrade of Portugal's sovereign debt rating by two notches. Investors likely factored in the cut weeks ago. Separately, Shanghai Composite tumbled 1.6 percent after Chinese officials reiterated that they would maintain curbs on the country's runaway real estate sector. While investors may be disappointed in the short-term with this decision, anyone with a long-term view would have to be relieved that China is concerned about asset bubbles and domestic inflation.

U.S. stock futures are pointing to a higher opening after aluminum giant Alcoa kicked off second quarter earnings by beating analyst expectations. After the close, the company said that it swung to a profit of $136 million, or 13 cents a share, compared with a year-earlier loss of $454 million, or 47 cents a share in the second quarter. The company achieved the results despite a 12 percent drop in aluminum prices year to date. Equally important as last quarter's numbers, the company raised its outlook for aluminum consumption to 12 percent growth, from 10 percent. The stock had dropped slightly during the regular session, but rose by over 3 percent in after-hours trading.

Today, tech bellwether Intel will report. Investors often use the semiconductor industry as a proxy for business spending. Companies have been maintaining large cash positions to weather the economic downturn--if Intel's report shows that businesses are starting to spend some of that money on their computer systems, it would be a positive sign for the recovery.

Finally, it looks like the Senate is ready to vote on and pass financial regulatory reform. Three Republican Senators from New England, Scott Brown (MA), Olympia Snowe (ME) and Susan Collins (ME), have extracted the concessions necessary to ensure passage of the bill. I wonder if Home Run Derby Winner David Ortiz of the senators' beloved Red Sox, put the lawmakers in a more conciliatory mood.

Jill Schlesinger

Jill Schlesinger, CFP® is the Emmy-nominated business analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and chief investment officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.

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