Indices are down for a second straight day to start the week as traders mull over recent events and prepare for earnings season which starts tonight with Alcoa reporting after the close. The Dow has slipped back toward 17,000 while the S&P remains stuck below the big 2,000 barrier. Indices had touched new all-time highs on the back of last week’s strong US employment gains but haven’t been able to make much headway beyond that. Despite dovish talk from Fed Chair Yellen, traders appear to be recognizing that strengthening employment and rising inflation may combine to increase pressure on the Fed to start raising interest rates sooner than currently thought. Indices moved up significantly through May and June, a historically seasonally weaker period for stock markets, driven by anticipation of more liquidity from the ECB and ongoing monetary support from the Fed. With earnings season approaching, traders are now looking to see if results can justify the higher valuations. The reaction to today’s Alcoa report may give a better indication of whether traders are looking to this earnings season for reasons to keep the momentum going or for reasons to take profits off the table. Meanwhile in Europe, indices remain under pressure with the Dax falling further away from 10,000 after it failed to hold that level for a third time, and the FTSE declining after UK industrial production data came in below expectations. In commodities today, gold continues to consolidate recent gains on anticipation of rising inflation. Gold has been tracking ECB money supply for the last several years and remains supported ahead of this fall’s new targeted loan programs. Crude oil, particularly Brent, continues to tumble as fears of supply disruptions continue to diminish with Libya preparing to reopen some of its supply terminals and turmoil in Iraq still far from the southern producing area. Copper is holding recent gains indicating improving expectations for the global economy and resource demand. In currency markets today, Asia Pacific currencies (AUD, NZD and JPY) have been outperforming their peers in other regions ahead of this week’s monthly basket of key Chinese economic numbers which starts with inflation reports this evening. The Loonie continues to give back some of its recent gains after Ivey PMI fell to 46.9 from 48.2 instead of rebounding to 52.0 as the street had hoped. Friday’s Canadian employment report may give a better indication if this is a normal trading correction or a change in trend. Economic News Economic reports released overnight and this morning include: UK industrial production 2.3% vs street 3.2% UK manufacturing production 3.7% vs street 5.6% Germany trade balance €17.8B vs street €16.2B France trade balance (€4.8B) vs street (€4.2B) Japan trade balance (¥675B) vs street (¥822B) Economic reports due later today include: 3:00 pm BST UK NIESR GDP estimate previous 0.9% 4:00 pm EDT Alcoa earnings street $0.12 Regional Fed Presidents Lacker and Kocherlakota are speaking this afternoon. Today’s technicals include our regular weekly updates