GOOD MORNING. Stocks in Asia closed mostly lower today, European shares are mixed, and U.S. futures are pointing to a higher open.

After Tuesday s trading session, which left stocks at their lowest level for the year, Wall Street today will focus on whether it can regain any of the losses. The S&P 500 Index has edged back down to its November 2009 level and the Dow Jones Industrial average is more than 12% lower from its 52-week peak of 11,309. The concern now is that the market isn t necessarily enduring a correction off its 2009 highs but that it instead might be signaling the beginning of another recession. The market drop is likely a result of weak U.S. economic data, including waning consumer confidence and relatively static new job growth. At this point, the question for the stock market and the U.S. economy is whether they ve reached a standstill and if so, then what s next.

One factor likely to determine the stock market s next direction will be the Bureau of Labor Statistic s employment report for June, which will be released on Friday. Economists polled by Briefing.com project a slight increase in the unemployment rate to 9.8% from 9.7%. Should the unemployment rate continue to tick up, its impact on personal income and spending could add further shocks to the economy. Meanwhile, yields on the two-year Treasury have fallen to a record low of 0.61% and yields on the 10-year Treasury stand at 2.97%, their lowest level in more than a year, suggesting that investors are flocking away from equities in search of safe havens. The U.S. economy appears headed into a second leg of an unusually challenging downturn, wrote John Hussman, president of Hussman Investment Trust, in a report, pointing to unemployment and the unstable housing market. Put bluntly, I believe that the economy is again turning lower, and that there is a reasonable likelihood that the U.S. stock market will ultimately violate its March 2009 lows before the current adjustment cycle is complete.

It s also possible that we could be seeing the first signs of a deflationary environment. Declining bond yields are unlikely to change course and are occurring because of a growing realization that deflation, at least of a mild nature as it pertains to the Consumer Price Index, is inevitable, wrote David Rosenberg, chief economist and strategist at Gluskin Sheff, in a report. He adds that investors should look for spotty earnings reports for the upcoming reporting season as yet another sign that a V-shaped economic increase is unlikely to occur in the near term.

IN OTHER NEWS:

• AstraZeneca (AZN) shares have risen more than 10% after a court ruling on Tuesday in favor of the company s patent on Crestor, a cholesterol drug. LINK
• Sony (SNE) announced today that it s recalling 535,000 Vaio laptops that may cause excessive heat. LINK
• The European Central Bank loaned banks 131.9 billion euros, which was less than expected and helped raise the euro against major currencies. LINK