The U.S. stock markets managed to make it into positive territory at about 10.AM. (EDT) this morning.  Some of the move may have been carryover from last weeks’ bullish action, or it may be related to some merger related news hitting the wires today. Insurance company, Aon Corp. (AON) announced it will be buying Hewitt Assoc. (HEW). Investors may be hoping that an uptick in merger activity may signal increased confidence on the part of large corporations. 

Since that earlier spurt, though, all three widely watched indexes (the Dow, S&P, and the NASDAQ) have been waffling. Declining issues are leading advancers by more than 2 to 1. Basic materials stocks are among the weaker sectors.  AK Steel (AKS) is down about 4%, with larger losses in U.S. Steel (X).  Elsewhere, Alcoa (AA - Free Analyst Report) is also trading lower.  Furthermore, copper shares are also off sharply today. This move could also reflect investors’ concerns about a slowdown in construction levels.  On a more positive note, the semiconductors stocks are bucking the downtrend, likely reflecting renewed analyst enthusiasm.  Flash memory giant SanDisk (SNDK) is up over 5%, and Micron (MU) has also been showing some strength.

In part, some of the weakness in the basic materials and commodity stocks may be tied to some strength in the US dollar today. Strength in the dollar index may be of some concern to investors hoping that commodity demand will pick up, indicating improved global economic health.

Elsewhere, the euro, which had reached as high as roughly U.S. $1.60 in mid-2008, obviously has fallen on hard times since.  However, the currency, now at about U.S. $ 1.26, has been appreciating for the past several weeks. Traders’ fears about the European debt crises may have been alleviated, and they are more confident that the bank stress tests and austerity measures should help. Ultimately, a firmer euro should help for larger U.S. companies, doing business in the continent. A stronger euro has also likely helped the U.S. stock market in various ways.  By overlaying a chart of the euro and the S&P 500, since the recent stock market correction commenced in late April, one can see how closely correlated these two indexes are.

On the economic front, there were no large reports out today. But, investors are likely fixated on earnings season. Dow component Alcoa is slated to report after the market closes today.

Technically speaking, the S&P, which may have bottomed for now, had a good run over the past few days. The index is currently butting up against its 20-day moving average (at roughly 1,076). This is a short-term indicator watched by many traders. Hopefully, for the bulls, a decent corporate earnings outlook, and a stabilizing situation in Europe, will provide the catalyst for a move up.