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NYSE Morning Update:
Ahead of the Bell: Dow futures are trading down 33 points and S&P futures are trading down 4 points. US equity futures are trading down this morning ahead of an economic report which is expected to show American retail sales fell for a second consecutive month in April, hurt by slowing demand for automobiles. Investor sentiment is also being dragged down by Chinese data which indicated that fixed-asset investment unexpectedly decelerated last month, while industrial output trailed estimates. Corporate earnings will also be in focus as Q1 earnings season winds down.
• On the economic calendar today, April retail sales data will be released before the market opens and a 0.3% drop is expected, following a 0.4% fall the month prior. March business inventories data is due out after the market opens and a 0.3% increase is expected, vs. a 0.1% rise the month before.
• The dollar is up against the yen and down against the euro and British pound. Gold is trading at $1,432. Crude oil is currently trading at $95 a barrel.
• Last week, the Dow and S&P ended at record highs on Friday, as stocks posted a third consecutive week of gains amid a very light economic calendar. The Dow finished the week up 1% and the S&P 500 ended the week up 1.2%. Equities have been on an upward trend since the beginning of the year, due in large part to the Federal Reserve’s aggressive monetary policy and better than expected corporate Q1 earnings. Chairman Ben Bernanke provided an update on the overall state of the economy in a press conference last week. Bernanke reiterated that the central bank will continue its easy monetary policy despite signs of an improving labor and housing market.
• The week ahead; corporate earnings and improving economic data are expected to drive equity markets higher this week. Market watchers will be looking to see if the bulls will be able to maintain the Dow at 15K and the 1600 level on the S&P 500. There are a number of retailers reporting earnings this week, which is expected to shed some light on the health on the American consumer. Retail sales will be in focus, particularly since the numbers were disappointing last month. On the economic calendar, other reports on the slate include import and export prices, producer price index, Empire State index, industrial production, home builder’s index, consumer price index, and consumer sentiment. The most important data this week will be weekly jobless claims. The claims numbers have been declining steadily for the past several weeks as fewer Americans have filed for unemployment benefits. On the earnings front, first quarter results are winding down with a few notable names on the docket, mostly retailers left to open their books for the season such as Macy’s, J.C. Penny, Nordstrom, Kohl’s, and Wal-Mart. Thus far, 89% of the S&P 500 has reported first quarter earnings and 67% have topped earnings expectations, while 46% have beaten revenue expectations. On the radar for investors is the Federal Reserve’s Jackson Hole symposium in late August. Investors are concerned that if the economic data improves, the central bank could move to scale back its bond buying program, which could spook the markets. There is also the looming fiscal battle in Washington over the debt ceiling vote and the European debt crisis which hangs over the equity market like a dark cloud.
• On CNBC today, Oscar Schafer, Chairman of Rivulet Capital, talked about the equity market and where it’s heading. Shaffer said retail investors don’t talk about stocks anymore, but he believes investors will return to stocks after all the down turns in the equity markets over the past decade. People will begin to question why they are not invested in stocks, once they realize their money is not being put to work and earning zero interest. Schafer feels this bull market is not over yet, as it’s in the beginning of the 3rd inning. He likes companies where management allocates capital appropriately. Companies can allocate capital by buying back stocks, paying out dividends, or even using the capital for an acquisition. He looks specifically for companies that have bought back their stocks as their EPS will go up.
• In sports, the New York Rangers forced Game 7 tonight in Washington, D.C., following Sunday’s game 6, 1-0 shutout at the Garden. Lets go Rangers!!
• Happy Monday and have a wonderful week!
Friday’s Close
DJIA up 35.87 pts/+0.24%/ 15,118.49
S&P up 7.03 pts/+0.43%/ 1,633.70
Nasdaq up 27.41 pts/+0.80%/ 3,436.58
Monday’s Futures
Dow Futures down 33.00 pts/-0.22%
S&P Futures down 4.50 pts/-0.25%
Nasdaq Futures down 8.25 pts/-0.27%
Overseas Markets
FTSE -0.12%
CAC 40 -0.10%
NIKKEI 225 +1.20%
HANG SENG -1.42%
Overseas: World stock markets are lower today for the first time in weeks before a report which may show that American retail sales slipped last month.
Economic Reports: Retail Sales (-0.3% expected) at 8:30 a.m. Business Inventories (+0.3% expected) at 10:00 a.m.
Top Headlines:
• Reports indicate, Elan stepped up its bid to keep its independence on Monday by agreeing a $1 billion deal to buy 21 percent of the royalties that U.S. Company, Theravance receives from GlaxoSmithKline for its respiratory drugs.
• The Wall Street Journal has reported that Jamie Dimon may consider leaving JP Morgan (JPM) if he is stripped of the Chairman role, when shareholders vote next week.
• It was reported that Dell’s (DELL) special committee asked billionaire Carl Icahn and his partner Southeastern Asset Management Inc. for more information regarding a proposed takeover of the personal computer maker
• Sources indicate that the Japanese telecom company, which owns 33% of Alibaba Group Holding, has told banks that their financing of Dish’s $25.5 billion rival offer for Sprint (S) could hurt their chances of landing a role in a highly anticipated public offering of the Chinese e-commerce giant.
• According to sources, Comcast’s NBC is going back to the future to refresh its Thursday night lineup, anchored by a new comedy starring Michael J. Fox. “The Michael J. Fox Show” will debut at 9:30 p.m. New York time on Thursdays when the season begins in September.
Commodities/Currency:
Gold: down $3.90 to $1,432.70
Oil: down 0.87 to $95.17
EUR/USD 1.2992 +0.0001
USD/JPY 101.6255 -0.1600
GBP/USD 1.5383 +0.0001
Volatility Index (VIX): As of the close of business Friday, May 10, the VIX is down 0.58 at 12.55
Companies Reporting Quarterly Earnings:
Cellcom Israel (CEL) reports Q1 EPS of NIS0.67, missing estimates by NIS0.56 and Q1 revenue of NIS1.25B.
Today’s Opening and Closing Bells:
Textainer Group Holdings Limited Commemorates 5th Year of Listing and Hosts Analyst Meeting at the NYSE. Neil I. Jowell, Textainer’s Chairman of the Board, and Philip K. Brewer, Textainer’s President and Chief Executive Officer will ring the opening bell.
Canon U.S.A. Highlights its New State-of-the-Art Headquarters, One Canon Park and will ring the closing bell.