Morning Market Movers: Why Are Stocks Being Cautious?

Here’s what’s shaking:

Stocks:

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Stocks were being traded cautiously across global markets Tuesday as investors prepared for the start of the U.S. corporate earnings season and digested a mixed batch of European economic indicators.

The markets will get a feel for the health of corporate America as earnings reports start coming in. Aluminum producer Alcoa Inc. will be the first major company to release results for the fourth quarter of 2012 on Tuesday after U.S. markets close.

By midafternoon in Europe, Germany's DAX was 0.1 percent lower at 7,723.00 while Britain's FTSE 100 was flat at 6,067.30. France's CAC-40 rose 0.4 percent to 3,720.34. The euro edged down 0.2 percent to $1.3086.

Wall Street opened slightly lower - both the Dow Jones industrial average and the broader S&P 500 were down 0.1 percent, to 13,361.29 and 1,459.76.

European investors were torn between two sets of economic indicators.

One showed that unemployment in the 17-country eurozone hit 11.8 percent in December, a record high and up from 11.7 percent the previous month. The figure highlights the huge economic challenge facing Europe - although financial market turmoil has subsided, the labor market continues to weaken.

But a separate report was more upbeat, showing business and consumer sentiment in the eurozone rose in December by more than analysts were expecting and that retail sales edged up in November. That suggests that the improvement in financial markets during those months helped economic activity stabilize.

Analysts warned, however, not to expect any imminent turnaround in the economy.

Oil:

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The price of oil edged closer to $94 a barrel Tuesday, reflecting optimism on European stock markets despite conflicting economic data.

By early afternoon in Europe, benchmark oil for February delivery was up 52 cents to $93.71 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 10 cents to finish at $93.19 a barrel on Monday.

Investors will be monitoring fresh information on U.S. stockpiles of crude and refined products.

Data for the week ending Jan. 4 is expected to show builds of 1.5 million barrels in crude oil stocks and 2.6 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.