Dow Morning Checkup: What to Watch This Morning

Markets appear headed higher in early trading this morning, with Dow Jones Industrial Average (INDEX: ^DJI) futures pointing toward a positive start following last week's 3.6% gain for the blue-chip index. The move marked the Dow's best weekly performance of the year, with stocks bolstered by encouraging developments in Europe and China, as well as hopes of additional monetary easing domestically. The Dow's top performer last week was Home Depot (NYS: HD) , whose shares enjoyed a 9.2% gain due in part to an optimistic long-term outlook provided in concert with its investor day last week.

Banks in focus
The morning optimism is being driven by weekend developments that included a press conference from Spanish prime minister Mariano Rajoy on the country's new aid package. The package is aimed at shoring up balance sheets of Spanish banks, which have been reeling due to a sluggish economy and housing slump. News of an aid package is expected to insulate the sector from turbulence following Greek elections slated for Sunday. Shares of Banco Santander (NYS: STD) rallied nearly 15% last week on earlier news of the aid package and the potential for more broad-based stimulus in Europe from policymakers.

Away from Europe, U.S. banks are facing some negative news from ratings agency Moody's, which is expected to reduce credit ratings for numerous large financial institutions, including Bank of America (NYS: BAC) and Citigroup (NYS: C) , later this month. Of note, the banks could see ratings on short-term debt instruments slashed to a point that would limit participation from money market funds. In other bank news, Citigroup will not pursue permission for a dividend increase as it resubmits its 2012 capital plan to regulators this week. The company failed the Federal Reserve's March stress test and currently pays a $0.01 quarterly dividend. Bank of America, which passed the test in March, pays an equivalent dividend but didn't request an increase earlier this year.

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At the time thisarticle was published At the time of this writing Brenton Flynn had no stake in the companies mentioned. The Motley Fool owns shares of Citigroup and Bank of America Corporation Com.Motley Fool newsletter serviceshave recommended buying shares of Home Depot. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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