Europe Leads the Way on Monday

The U.S. economy is creating jobs at a much healthier pace, and the unemployment rate has edged down to the lowest level in nearly three years, but stocks still face negative headwinds blowing from Europe.

An alarming rise Friday in the cost of borrowing in Italy took U.S. stocks down, even after a blowout jobs report.

This week brings more European news and events; there are bond auctions in Spain and Italy on Thursday and Friday respectively, and today the leaders of France and Germany meet in Berlin to discuss what we can expect at a European Union Summit later this month.

Closer to home, U.S. investors will be paying attention to the unofficial start of the fourth-quarter earnings season. Aluminum giant Alcoa (NYSE:AA) reports after Monday’s closing bell, with analysts expecting a loss of 2 cents a share on sales of $5.7 billion. Over the weekend, Barron’s reported that Alcoa shares could rise as much as 30% as the price of aluminum may have bottomed.

Hong Kong and Chinese stock markets rallied Monday.  Over the weekend, China’s Premier, Wen Jiabao, called for efforts to boost confidence in the stock market, as well as for rule changes to allow private capital investment in the region’s banks and insurers. The Chinese government had taken several steps last year to cool China’s overheated economy.

Lovers of gadgets and gizmos head out West to Las Vegas today for tomorrow’s official kick-off of the world’s biggest Consumer Electronics Show, or CES.  At least 140,000 people are expected to descend on the nearly two miles of exhibit space at the Las Vegas Convention Center this week. Hot products include “ultrabooks,” which are ultra-thin, ultra-light laptops meant to compete with the uber-popular Apple iPad. Car makers are also expected to showcase their latest in high-tech cars.  Expect more partnerships between automakers and software companies.

Noticeably absent from CES are Apple and Amazon, who sell some of the hottest gadgets around.  As of next year, Microsoft will no longer be presenting at CES.  Many tech companies say the January timing of CES does not align with their own product launches.