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While the CAC, DAX, and FTSE are sporting gains this morning the EURUSD has fallen along with gold and oil and the U.S. stock futures only have modest gains this morning. Facebook (FB) is again being sold in the pre-market, right now down 3.2% and below yesterday's low of 33. Meanwhile, the shift we saw over the last couple of weeks out of AAPL, MSFT, and GOOG to get into FB has began to change back to money flowing back to those stocks with AAPL finishing up 5.83% yesterday, MSFT gaining 1.63%, and GOOG adding 2.28%. Yesterday's strength in the S&P did leave behind two names that lead the early 2012 rally: JPM and BAC.
Elsewhere this morning, Best Buy (BBY) initially spiked after reporting earnings that showed gross margins compressing but also included restructuring charges. We also saw a downgrade of Japan's sovereign debt from AA to A+ by Fitch. The Yen is down slightly against the dollar this morning but the Nikkei gained 1.1%.
April Existing Home Sales are due out at 10 a.m. with expectations of 4.66mm units sold. Also due out at 10 a.m. is the Richmond Fed Index which is expected to come in at 11. Other than that, volume may be light ahead of the three-day weekend. It should be noted that the bond market will close at 2 p.m. on Friday while the U.S. markets will remain open until four.
The defense of 38 continues today as Facebook (FB) is set to gap down to below the $38 offering price. While it remains to be seen whether the entire social media bubble happened before its heavyweights hit the public markets, the early price action on FB and others in the space has left many questioning how much risk appetite their is with European weakness still weighing very heavily on the U.S. markets. The weakness in FB is leading Morgan Stanley (MS) down this morning over 1% as we may begin to see a correlation develop between the two.
This week will be light on data so the focus should shift back to Europe. Home sales data will trickle out during the week and some earnings are due from retailers and others. We will post more information on levels to watch but right now the nearest support should come in around 1275-80 as it represents a 10% correction from the recent S&P high of 1415 and the 200 DMA.
In This Issue:
*Change in Rating: Boeing Co.: Upgrading to BUY on strong order flow and record backlog (Nathaniel Gabriel)
*Growth Stock: Activision Blizzard Inc.: Beats 1Q consensus, though EPS down from last year (Joseph Bonner)
*Growth Stock: Herbalife Ltd.: Einhorn silent on HLF; reiterating BUY (John Staszak)
*UtilityScope: AGL Resources Inc.: Warm weather drives disappointing 1Q12 (Gary Hovis)
The day is finally here when Facebook (FB) will debut on the Nasdaq. The stock is expected to begin trading around 11 a.m. and the exchanges will not accept market orders for the open, only limit orders, until the opening print. For those unfamiliar with IPOs, they are often very volatile and while there is a lot of volume, the spread can be wide until a base of liquidity is established. This can take some time so it is recommended to use limit orders and be prepared for significant price swings.
In other news, the Nikkei closed down 3%, led by a 5.3% decline in Sony. Europe opened weaker but has since climbed to modest gains. The S&P finished yesterday with its 10th negative day out of the last 12 but is positive this morning. Yesterday it was reported that Hewlett Packard (HPQ) is considering a cut of 25,000 workers or about 8% of its workforce. Bad Spanish loans hit a 17-year high, further spooking their already fragile markets. Around $188bn in loans were three months or more overdue.
Weakness in Europe and a slightly higher-than-expected weekly jobless claims number has the U.S. stock futures slightly lower this morning. The biggest news today, however, will come after the bell when Facebook (FB) prices its IPO. Demand is expected to be very high as evidenced by the size of the offer increasing twice. Tomorrow the stock will debut on the secondary market, trading on the Nasdaq under ticker FB. The frothy market for user-generated web content continues to lure investors with Pinterest getting financing that values the company at $1.5bn.
Wal-mart's Q1 profit and revenue beat analyst forecasts and has that stock higher this morning. Also reporting this morning was Sears, earning $1.78/share, though the number is not comparable to last year:
"Stripping out roughly $200 million of gains from the sale of some U.S. and Canadian stores, the company reported a loss of 31 cents a share versus a year-earlier loss of $1.34 a share."
On the flipside, JP Morgan (JPM) is down 1% this morning after it was reported their bad prop position is deteriorating and has surpassed initial estimates by 50%.
Zacks #1 Rank Stocks
Most Recent Additions to List
S&P futures are up about 8 pts. above fair value heading into the open, ticking higher after Housing Starts numbers came in better-than-expected, building on the gains from earlier and following the DAX and CAC higher after starting the morning down. The market yesterday again closed at lows not seen since February while market leader Apple (AAPL) closed below its pre-earnings level. If the selloff continues, 450-500 is the next range with any support while this weekly chart of AAPL has shown most bottoms in the last three years to come right at or around the 50 week moving average (now at 439).
Elsewhere this morning Facebook (FB) will increase its offering despite GM saying they will stop advertising on the site. Troubles in Greece continue as a new government has still not been formed and talk of them leaving the Eurozone continues to heat up.
Yesterday's highs came in at 1344 so that will be the first line of resistance with 1350-1355 providing headwinds above that.
Home Depot's profit forecast is weighing on their stock price this morning heading into the open but most of the rest of the market is up solidly, with the Spoos up 8.5 pts and the Nasdaq up 20. Better-than-expected German GDP data lifted the European markets this morning but the move has since faded back to the unchanged level. Meanwhile, gold and the EURUSD remain about flat heading into the US open. While this is good for Germany (all things considered), the rest of Europe remains weak:
Elsewhere this morning, Avon Products (AVP) will gap down after Coty announced it was withdrawing its bid for the company. Slow retail sales were weaker-than-expected but Empire State Manufacturing rose considerably, in part due to falling energy prices.
Futures have been dropping since the Asian open last night and have followed Europes weak trading thus far (FTSE -2.1%, CAC -2.2%, DAX -2.0%). We are now set to open just at or below the lows from Wednesday of last week and the only support below that is a little at 1330 before the 200 DMA comes in at 1277. 1385 remains the top end of the range.
JPM looks to continue its weakness this morning along with the rest of the financial sector. In addition to the news released about JPM last Thursday, Ally's Rescap seeking bankruptcy may further weigh on the sector.
*Focus List: CMS Energy Corp.: Disappointing 1Q12 reflects warmer-than-normal weather (Gary Hovis)
*Value Stock: Altria Group Inc.: Strong pricing offsets lower cigarette volume (Nathaniel Gabriel)
*Value Stock: CenturyLink Inc.: Solid 1Q12 as revenue decline moderates (Joseph Bonner)
*Value Stock: Kimco Realty Corp.: Attractive yield and solid fundamentals (John Eade)
*UtilityScope: Southern Co.: Disappointing 1Q12; trading near fair val ue (Gary Hovis)
*Stock to Avoid: Motorola Mobility Holdings Inc.: More losses in 1Q; awaiting deal approval in China (Jim Kelleher)
The big news last night and this morning are the trading losses reported by JP Morgan Chase that is sending the stock down over 8% heading into the open and other financial stocks down in sympathy. Because of this and weakness in Spain, the S&P is set to gap down another .5% with Gold and Crude Oil also falling hard. Notable strength this morning in the Nasdaq which is down by only .3% in the pre-market.
Consumer Sentiment at 9:55 (Exp. 76.2) is the only news to be released today but with yesterday's late-day sell off and the news from JPM, the market may have some good action today. Keep an eye on the Nasdaq for leadership to the upside and the financials for moves to the downside. 1343 was the low on the S&P from Wednesday with 1365 being the high from yesterday is the range that could restrain the market if volume tapers off.
Futures are very weak heading into the open this morning as Spain has sold off 3.5% so far today and the CAC, DAX, and FTSE are also negative. So far in May, we are down 2.5% on the S&P and the futures are pointing to a gap-down of another 1.00%. Yesterday's breach of the 1.30 level on the EURUSD coincided with new low yields on the US 10yr as well as a break below the April lows on the S&P to briefly touch 1347.50. We are now set to gap down to that level and potentially break below. To the upside, 1385 is where the 20 and 50 DMAs are curling over to the downside.
After the close, Cisco Systems (CSCO) is due to report with analyst expectations coming in at .47/share along with Priceline (exp.: 3.98). Tesla Motors (TSLA) is also set to report with Capital IQ consensus estimates coming in at a loss of .69/share.
Last night, Disney (DIS) and Macy's (M) beat expectations but both are down in the pre-market.
*Change in Rating: First Solar Inc.: Downgrading to HOLD on balance sheet concerns (Jim Kelleher)
*Growth Stock: Harsco Corp.: Challenging 1Q; questions about long-term guidance (Nathaniel Gabriel)
*Growth Stock: Time Warner Inc.: Networks division drives strong first quarter (Joseph Bonner)
*Value Stock: Occidental Petroleum Corp.: Record domestic production in 1Q12 (Philip H. Weiss)
The big news over the weekend was the election results from France, Greece, and Russia. The election of a socialist president in France has the CAC up .5%, led by Arcelor Mittal, possibly on the speculation of how the proposed French stimulus will be spent. On the flipside, the DAX is down .5% as part of President-elect Hollande's platform involved the negotiation of austerity measures the French already agreed to. A larger French deficit could signal more weakness for the Euro.
Today brings the release of Consumer Credit at 3 p.m. and the rest of the week is low on economic releases. Last week was a negative week for the S&P, the fourth in the last seven weeks. While earnings are almost all in for the S&P 500, the seasonal low-volume of the May-August months has come a little early. Last week it was among the lowest weeks in 2012. Keep an eye on 1355-1360 with 1350 being the only level of support until 1300.
Included in the May 2012 FinTech Newsletter:
- Argus Research – Market Digest for April 30th, 2012
- Economic Calendar for May 2012
- Zacks Articles: Growth and Income – Waddell & Reed (WDR) and Aggressive Growth – Priceline.com (PCLN)
- Notes from the Fred Report: Midweek Update for May 2nd, 2012
A weaker than expected payroll number this morning has futures down right now after yesterday's weak price action. There is no other economic releases scheduled for today but yesterday's selloff and today's gap down could lead to a very interesting day. 1355-1360 is the first level of support should the S&P continue to sell off while upside resistance will come in at 1390 then 1415.
For the second straight day, futures dropped following jobs numbers, this time in the form of continuing claims coming in lower-than-expected but the prior number revised upward. This comes in ahead of tomorrow's big jobs report that currently has expectations around a gain of 160,000 jobs in April. While any beat of this number is a good sign, the drop in the unemployment rate and and the job gains have not been as robust as a strong recovery would suggest and the average duration of employment remains stubbornly high.
Heading into the open, the 10:00 am ISM non-manufacturing index will be released, expected at 56 and retails sales have been coming in throughout the morning.
Futures sank at 8:15 with the release of the ADP employment report that came in lower than expected and showed the lowest job gains in seven months. We are now seeing the S&P futures down .5%, falling along with crude, gold, and the EURUSD. Yesterday's lows of 1395 are the first layer of support (about where we are set to open) with 1385 being the next level.
Some concerning earnings misses this morning from Marathon Oil and Clorox has those stocks lower this morning while beats from Comcast and Mastercard aren't enought to push them higher in the pre-market.
Euro-Zone Economic Woes Deepen
Facebook Said to Begin IPO Road Show as Soon as Next Week
Herbalife's Surprise Plunge
The CAC and DAX are closed today but Spain's IBEX is open and down over 1.5%. The U.S. futures are flat right now ahead of ISM Manufacturing and Construction Spending due out at 10:00 am and auto sales numbers that will come out throughout the day. Already out this morning was Chrysler with sales up 20%.
Pfizer Beats Estimates Readying Animal Health Spin-Off
BP Q1 Profits Down as Downstream Unit Struggles
P.F. Chang's Reaches $1.09B Deal to go Private
*Growth Stock: Celgene Corp.: Growth slowing for Celgene (John Eade)
*Growth Stock: Lockheed Martin Corp.: Aircraft deliveries drive solid 1Q results (Nathaniel Gabriel)
*Value Stock: Bristol-Myers Squibb Co.: Prepared for patent cliff (John Eade)
*Value Stock: Time Warner Cable Inc.: Acquisitions drive strong 1Q12; raising target to $90 (Joseph Bonner)
U.S. stock futures are down slightly ahead of the open as weakness in Europe, led by Spain and France, is carrying over to the U.S. Personal income came in this morning ahead of expectations but personal spending was lower than expected. Chicago PMI is due out at 9:45 and expected to come in around 60.8, down from March's 62.2.
Big news this morning:
B&N, Microsoft Team up on Nook, College Businesses
Energy Transfer to Buy Sunoco to Add Oil, Gas Logistics
Spain's Economy Contracts .3%
Hologic to Buy Gen-Probe for $3.7 Billion
Most Recent Additions to Zacks Rank List
Futures are flat right now following disappointing GDP numbers released at 8:30 showing the economy grew at a slower-than-expected pace in the first quarter. This number may be revised upward but 2.2% vs. 2.5% expectations is quite a miss.
The big news last night was the earnings from AMZN and their strong sales growth. That has the stock up over 16% in the pre-market. Elsewhere, Proctor and Gamble beat by a penny but earnings slipped from last year and Ford saw earnings drop 45% from a year earlier but beat by 3c/share.
In other earnings news:
Merck Profit Tops Analyst Estimates on Diabetes Drugs
Starbucks Falls 5% After Same-Store Sales Trail Estimates
Futures were flat to up slightly ahead of initial jobless claims numbers that came in higher than expected (388k vs. 373 exp.). We now see the S&P and Nasdaq futures down by more than .35% heading into the open. Yesterday's FOMC announcement and strong earnings gave the S&P 500 its first close above the 20 DMA since early April but there is broad weakness in Europe this morning.
Tomorrow morning will bring the release of initial Q1 2012 GDP data, expected to come in at 2.5% and tonight we will get earnings results from a number of companies including Amazon, Gilead, Starbucks, and Wynn.
Exxon First-Quarter Profit Drops as Output, Gas Decline
UPS Posts Higher Profit
Pepsi Q1 Profit Beats Expectations, Reaffirms 5% Drop in Full-Year Profit
Apple's decisive beat on the top and bottom line has the stock gapping up over 9.5% this morning ahead of a 12:30 FOMC decision and a 2:15 press conference with chairman Ben Bernanke. AAPL's EPS of $12.30 was well ahead of consensus analyst estimates of $10.04 and the revenue number was $2.5bn higher than expectations. As usual, their Q2 guidance is below analysts estimates but historically AAPL has beat them handily.
There is no question that AAPL is a big key to S&P earnings and has a large weighting in many indices so it will be important to keep an eye on them today. Yesterday they led the market lower midday and are a big reason the S&P and Nasdaq futures are up this morning. Other earnings from Boeing, Caterpillar, Eli Lilly, and Harley Davidson soundly beat expectations and have many of those stocks bid higher this morning but the biggest decrease in durable goods orders in three years has tempered some of the excitement this morning.
Strength in Europe is leading U.S. stock futures higher this morning ahead of a slew of numbers due out at 10:00 am:
Expectations
New Home Sales may be the big number here as the downward trend looks like it may be flattening and with rates remaining low going into the spring, investors will be looking for signs of momentum changing to the upside:
Today also begins a two-day FOMC meeting that will result in a policy announcement tomorrow at 12:30 pm. Expectations are for no change in the Fed Funds rate but it will be interesting to see the voting breakdown as rising CPI has far outpaced interest rates for several quarters now.
After the bell today comes the much-anticipated earnings release from Apple (AAPL). Capital IQ consensus estimates are EPS of $10.07 on revenue of $36,757.35bn.
In other news today:
Facebook's Growth Slows as IPO Nears
3M Profit Beats Estimates on U.S. Auto-Supply Demand
New Wireless Subscribers Down Sharply at AT&T
Netflix Counting On U.S. Growth as Overseas Eats Profits
*Focus List: Microsoft Corp.: Solid report in transitional March quarter (Joseph Bonner)
*Growth Stock: Advanced Micro Devices Inc.: Flat top line in processors, but positive guidance (Jim Kelleher)
*Growth Stock: Stanley Black & Decker Inc.: Margins widen and growth prospects improve (Nathaniel Gabriel)
*Growth Stock: Under Armour Inc.: Encouraging signs for the future (Christopher Graja and Katherine Heng)
*Growth Stock: Walt Disney Co.: Disney dismisses Studio Head Rich Ross (Joe Bonner)
*Value Stock: Nucor Corp.: First-quarter profit falls as shipments slip (Bill Selesky)
*UtilityScope: PNM Resources Inc.: Total return potential limited due to high valuation metrics (Gary Hovis)
The market is continuing the correction we have been writing about with the S&P 500 set to open around the lows of the last two weeks. Beyond the 1355-1357 support, the next level to watch out for is 1300:
The weakness today began in Asia where the Hang Seng closed down 1.8% led by China Mobile and China National Materials. Also released was PMI data which showed Chinese manufacturing contracted for the sixth consecutive month. India's Sensex also was weak, led down primarily by Infosys falling 3.9%. This carried over into Europe where banks, automakers, and other industrials reacted negatively to euro-area PMI which came in below expectations.
In other news:
Kellogg Cuts Full-Year Forecast Based on 1st-Quarter Performance
Nestle to Acquire Pfizer Baby Food Unit for $11.9 Billion
GM to Add 600 China Dealerships
The Nasdaq and Spooz are sporting .5% gains at the moment heading into an opening that will see no release of economic data. The DAX and FTSE are leading with .6% and .4% gains respectively.
Earnings releases from Microsoft yesterday and GE today are have those stocks up in the pre-market and the report from McDonalds this morning has boosted the stock 1.82% going into the open.
Elsewhere this morning, reaffirmed its 2012 outlook despite anticipating a "challenging year" and leaders of G-20 nations are urging Europe to fix its problems, coming on the heals of Christine LaGarde's comment yesterday that "dark clouds" are hovering over the EU.
Higher-than-expected jobless claims numbers have sent the futures to their lows of the overnight session. Also set to be released this morning are Existing Home Sales, Philadelphia Fed, and Leading Indicators, all due out at 10:00 am. A slew of earnings have stocks mixed in the pre-market but the consolidation of the last week or so has stocks wound up:
It seems like a range has been established between the 20 and 50 DMAs and the market is set to open right around the 50 DMA right now. Last Tuesday's low of 1357 would be the next line of support if the market was to break lower.
News of note:
Glaxo Bids for Human Genome Sciences
Philip Morris Profit Tops Estimates After Price Increases
Profit at Bank of America Falls to $653 Million in First Quarter
Spain Meets Bond Auction Target as Costs Rise
Nokia Reports Operating Loss on Nokia Siemens Costs
A slew of strong earnings and strength in Europe is leading the S&P and Nasdaq futures higher this morning. Goldman Sachs, Coca-Cola, and Johnson and Johnson exceeded earnings expectations this morning along with Northern Trust, US Bancorp, and Comerica. Weaker-than-expected housing starts were balanced by higher-than-expected building permits led the S&P futures down initially but have since recovered to remaining up over 5 pts. above air value.
While the Dow Industrials were relatively strong yesterday, they are underperforming the Nasdaq and S&P this morning.
U.S. Housing Starts Unexpectedly Drop to Five-Month Low
Coca-Cola's Profit Rises 7.9%
U.S. Bancorp Beats Estimates as Profit Rises 28 Percent
Goldman Profit Tops Estimates; Raises Dividend
J&J 1Q Profit Jumps 12.5 pct. Despite Sales Dip
Below is a table of earnings expectations for tomorrow based on estimates compiled by Capital IQ:
*Growth Stock: JetBlue Airways Corp.: Earnings grow despite jump in fuel costs (Nathaniel Gabriel)
*UtilityScope: UIL Holdings Corp.: Maintaining HOLD; favorable opportunity for the long term (Gary Hovis)
Futures are up over four tenths of one percent across the board as retail sales and earnings have exceeded expectations. Citigroup's top-line beat and bottom-line miss has the stock up around 2% going into the open but problems in Spain may hinder any broad rallies as yields there continue to soar.
Downgrades Loom for Banks
Afghan Insurgents Strike Across Nation
Exxon, Rosneft to Sign Strategic Deal
Below are links to the most recent Zacks #1 Rank stock list and the additions to the list since we last shared it on March 21st.
Zacks #1 Rank List
Most Recent Additions to Zacks #1 List (since March 21st)
Worse than expected GDP numbers from China have hit commodity producers on fears of slowing demand. CPI came in in-line with expectations, up .3% and .2% on core CPI. S&P futures are down 5 points below fair value right now and Nasdaq futures are down 10 pts.
J.P. Morgan Profit Slips
Google Proposes Changing Stock Structure to Keep Control
Wells Fargo Posts 13% Profit Gain
Biggest Banks May Need 17% Core Capital Under EU Plan
Zacks Previews JP Morgan's Earnings
Zacks estimates earnings at $1.17 per share when they report tomorrow morning. They currently rank JPM as a #3 or "Hold" and are "Neutral" on the stock.
Initial jobless claims grew vs. an expected modest decline but continuing claims fell more than expected in data out this morning. Also released was data showing the trade deficit grew less than expected. This has U.S. stock futures flat to up slightly going into the open. After the bell, Google (GOOG) will report earnings for Q1 2012 with Capital IQ consensus estimates at $9.64/share. Also set to be released after the close will be the Fed's balance sheet and money supply data, due out at 4:30.
Tomorrow will be a big news day with China set to release GDP figures and U.S. CPI and consumer sentiment due out in the morning.
U.S. Jobless Claims Rise to 380,000, Higher Than Forecast
Shell Shares Fall After Gulf oil Sheen Spotted
Italian Short-Term Yields Rise
Earnings announcements will accelerate next week with several banks and large-cap industrials set to release earnings. While earnings news will be light for the rest of this week, some bellweathers will be out, including two of the U.S.' biggest banks and Google on the heals of its somewhat disappointing 2012 Q4 release that came in .95 below consensus estimates.
Below are some of the earnings and revenue expectations for companies reporting April 13th and 14th:
EPS Estimates provided by Capital IQ
Check back with us for more information on expectations for next week's earnings announcements.
U.S. stock futures are gapping up big this morning with S&P futures up 14 pts above fair value and Nasdaq futures up 24.50 pts above fair value. The big news overnight was the earthquake near Sumatra and subsequent aftershocks, along with the possibilities of a tsunami.
In economic news, stronger than expected earnings from Alcoa last night is sending that stock up over 5% before the open but they did revise down their anticipated aluminum demand from China. Progressive (PGR) also saw a beat on earnings expectations this morning, also surpassing revenue estimates.
The Fed will release the Beige Book at 2 pm and Petroleum Inventories will come out at 10:30 but other than that, earnings and economic news should be light today.
Carlyle Is Said to Seek Value of Up to $8 Billion in IPO
Nokia Slashes Forecast on Smartphone Competition; Shares Slide
German Bonds Uncovered as Yields Hit Low
Futures are flat this morning after European markets opened down following yesterday's market holiday. Gold is seeing strength for the second consecutive day while crude is down slightly. Earnings will begin to come into focus this week with several banks set to report later this week along with Google.
World Agriculture Supply and Demand Estimates
China Swings to Trade Surplus
Sony Sees Record $6.4 bln Loss on Tax Hit
*Change in Rating: Tyco International Ltd.: Upgrading to BUY following Pentair deal announcement (Nathaniel Gabriel)
*Growth Stock: Pier 1 Imports Inc.: New three-year growth plan (Chris Graja and Katherine Heng)
U.S. stock futures plunged Friday morning after the labor market report and have remained lower. S&P futures are set to open down around 18 points this morning and the Nasdaq down 33. The Nikkei ended down 1.5% today, the fifth straight day of losses. Europe was closed due for the Easter holiday.
Stories of note this morning:
U.S. Stock Futures Point to Post-Jobs-Data Losses
AOL to Sell, License Patents to Microsoft for $1.06 Billion
China Inflation Exceeds Forecast
Emerging-Market Stocks Sputter
The Spoos are down 5.50 points this morning following the overnight weakness in Japan and Hong Kong and losses in Europe. Gold is seeing strength for the first time in a few days, along with the Nasdaq which is only down slightly this morning.
Major headlines this morning:
Announced U.S. Job Cuts Fall 8.8% From Year Ago, Challenger Says
Google Begins Testing Its Augmented-Reality Glasses (This is a real game-changer and fits right into GOOG's suite of products)
Spain's Borrowing Costs Soar
Retailers Turn In Mixed March Sales
Jobless Claims in U.S. Fell to Lowest Level in Four Years
Included in the April 2012 FinTech Newsletter:
- Argus Research – Market Digest for April 4th, 2012 - Economic Calendar for April 2012 - Zacks Articles: Aggressive Growth – Lindsay Corporation (LNN), Growth and Income – Cooper Industries (CBE), and Value Stock –Robbins & Myers (RBN) - Notes from the Fred Report: Midweek Update for April 4, 2012
U.S. stock futures are down considerably this morning as European indices are all down more than 1.2% each, led by the DAX down 1.8%. A solid ADP employment report (209k jobs added vs. 206k expected) is being overshadowed by rising rates and lower demand for Spanish bonds, pushing investors into U.S. bonds.
Also of note this morning:
ECB Leaves Key Rate Unchanged
Apartment Vacancies Decline in U.S. to Lowest Rate Since 2001
Romney Sweeps Three Primaries to Keep Lead Over Santorum
SanDisk Warns On Q1 Sales, Profit; Stock Tumbles
U.S. stock futures are down a bit this morning ahead of 10:00 am Factory Orders data and the 2:00 pm FOMC minutes. Check our Twitter, @FinTechATL, for the news as it breaks.
Some of the top stories for the morning:
Molson Coors Agrees to Buy Brewer StarBev for $3.5 Bln
Chrysler Sales Surge 34%, Ford Up 5%
SEC Probes Groupon
Spain Jobless Claims Continue to Rise
*Growth Stock: United Parcel Service Inc.: Cost savings and market share gains in Europe (Nathaniel Gabriel)
*UtilityScope: New Jersey Resources Corp.: Despite solid 1Q, an unexciting total return potential (Gary Hovis)
Weakness in Asia and Europe have led to a flat pre-market for U.S. futures. New Home Sales data is due out at 10:00 am with expectations coming in at 250k. Other than that, today is light on scheduled market-moving news and data. Weakness yesterday has the S&P looking at 1375-80 as the next level of support should we break through yesterday's lows. Beyond that, the next level would be 1350.
SEC Probes Rapid Trading
Bernanke Sees Need for Higher Household Spending to Fuel Growth
Morgan Stanley Ship Hauls Frozen Gas 14,500 Miles to Tokyo
Bank of America Tests Rental Program as Alternative to Foreclosure
There are quite a few new additions to Zacks #1 ranked stocks of varying market caps and industries.
Check out the most recent additions here and the entire list here.
U.S. stock futures are flat right now ahead of 10 a.m. Existing Home Sales, expected at 4.61mm. A mixed performance in Asia and slight gains in Europe lead us this morning, with the only other news coming from Romney's win in Illinois (which pretty much cements him as the GOP candidate this year) and a solid earnings report from ORCL.
U.K. Budget Deficit Doubles as Taxes Fall, Spending Jumps
Oracle Gains on Report Showing Buoyant Business Software
Romney Rolls to Illinois Win
General Mills' Profit Slips as Costs Rise
The U.S. stock futures are being pulled down by weakness in Europe and Asia this morning, with the Hang Seng closing down 1.1% and the Shanghai Composite falling 1.4%. Precious metals and financials are weak in the pre-market here in the U.S., leading to a bid in treasuries with the ten-year yield falling to 2.35%.
Housing Construction Cools
Amazon.com to Buy Kiva Systems for $775 million
BHP: China Iron Ore Demand 'Flattening Out'
Jefferies Posts $77 Million Quarterly Profit
Weakness in Europe has not dragged U.S. stock futures down as financials and automakers in Germany and France are leading the DAX and CAC down by .7%. The big news this morning was the announcement by Apple that they would begin paying a dividend and buy back up to $10bn worth of stock. After being halted, the stock has opened in the pre-market down about $5.
Apple to Pay Dividend, Plans $10 Billion Buyback
Surprise Increase in Rates Is Credited to Signs of Recovery
U.S. Made Profit on Mortgage Debt
*Growth Stock: Adtran Inc.: Severe revenue miss called one-time event (Jim Kelleher)
*Growth Stock: Alliant Techsystems Inc.: Disappointing 3Q results and reduced full-year guidance (Nathaniel Gabriel)
*Value Stock: Royal Dutch Shell plc: Lowering 2012 estimate; cost structure still high (Philip H. Weiss)
The major U.S. indices are about flat right now with notable reversals in place from bonds and gold. Each has nearly recovered their earlier losses and in the case of gold, moved to positive for the day. Following an early spike to nearly 3.50% on the 30-year, buyers stepped back in taking the yield down to 3.41%.
Volume is light for a quadruple witching day leaving stocks in a tight range for the past two hours, but strength in the EURUSD, crude, and gold combined with yesterday's close above 1400 may lead to a little afternoon pop.
The futures are mixed right now on light volume while the gold and bonds are selling off. February CPI came in-line with expectations up .4%. Industrial Production is due out at 9:15 (consensus: +.5% with a 78.8% utilization rate) followed by University of Michigan Consumer Sentiment at 9:55 (consensus: 76).
Traders Bet Fed Rate to Rise Year Before Late-2014 Pledge
Chile Keeps 5% Rate as Prospect of Colombia-Like Rise Looms
It was announced this morning that Cisco will aquire NDS for about $5bn and what you are seeing in the market today is a great example of merger arbitrage:
CSCO is selling off (down about 1.66% right now) and is weak relative to the S&P, Nasdaq, and Dow's gains this morning. It puts the stock in an interesting position as it has retreated to its 50 DMA after failing to break through its previous highs for the year:
This may lead to more technical weakness as investors decide whether CSCO is overpaying for NDS but for the time being, CSCO may have some trouble with the $20 level.
U.S. stock futures are up slightly this morning after initial jobless claims fell to their lowest levels in four years. Bonds continue to sell off bringing the 10-year yield up to 2.30% right now.
In truth, March Madness will probably be luring eyes away from their terminals today which would not be out of line with the light volume we have been seeing for the last several weeks.
Foreclosures Fall 8% in U.S. With Seizure Increase Coming
Goldman Plays Damage Control
Wholesale Prices in U.S. Increase by Most in Five Months
Treasuries Drop in Longest Losing Streak Since 2006
U.S. stock futures are flat this morning following Import and Export data that showed a U.S. Current Account deficit growing bigger than expected. On the plus side, export prices ex-agriculture rose more than expected. With the bank stress test data being released early, the next wave of data will not come out until tomorrow morning.
Stories of note:
U.S. Fourth-Quarter Current-Account Gap Widens to $124.1 Billion
Stress Tests Buoy U.S. Banks
German Bonds Decline Before Italy Auctions $7.8 Billion
Mortgage purchase demand rose last week: MBA
U.S. stock futures are sporting gains going into the open ahead of an afternoon FOMC announcement that is expected to see the Fed continue its current low-rate policy.
Retail Sales Accelerate
Dollar hits 11-month high versus yen, euro slips
Spain Agrees to EU Budget Demands
Americans More Confident in Housing Recovery
This Monday morning begins with U.S. stock futures down a bit as a mixed performance in Europe, light volume, and light news has not pushed the markets in any direction. The big catalyst this week will be the FOMC announcement tomorrow at 2:15 p.m.
China's Trade Deficit Larger than Expected; Biggest in More than Ten Years
Portugal Yield at 13% Says Greek Deal Not Unique: Euro Credit
Wells Fargo Poised to Lead Payouts Higher
Italy Data Confirm Recession
Link to Argus Market Digest for March 12, 2012
*Growth Stock: Helmerich & Payne Inc.: Beats consensus in 1Q12; strong FlexRig orders (Philip H. Weiss)
*UtilityScope: Calpine Corp.: On track to produce a strong recovery in EPS (Gary Hovis)
*UtilityScope: CenterPoint Energy Inc.: Strong 2011 EPS, but trading near fair value (Gary Hovis)
*UtilityScope: MDU Resources Group Inc.: Continued strength in utility businesses (Gary Hovis)
A gain of 227,000 jobs in February has perked U.S. stock futures up this morning as bonds, gold, and the Euro are down. France and Germany are sporting .4% gains right now with strength in the automakers and select financials.
Starbucks to sell single-serving coffee machines
China Data Show Slowdown
Greek Debt Swap at 95% After Bondholders Forced to Join
Futures are up strongly this morning after European indices have been strong all morning. Greece's debt swap appears to be on track and despite lower GDP growth forecasts from the ECB, the Euro is up vs. the dollar and the DAX and CAC are up over 2.0%.
In the news this morning:
U.S. Initial Jobless Claims Rose 8,000 to 362,000
Italian, Spanish Yields Plunge as Greece Closes on Debt Swap
ECB Holds Interest Rates At Record Low
McDonald's Says Feb. Sales Rose 7.5 Percent (MCD is down 3.25% in the pre-market)
S&P: China Developers Getting Closer to "Downgrade Thresholds"
'Sterilized' Bond Buying an Option in Fed Arsenal
Futures are up around .40% this morning following a similar performance in Europe. Weakness yesterday across the board gave the U.S. markets their worst day of the year and has given pause to the rally as small-cap stocks lead the market lower. Friday's jobs report was given a boost as the ADP Employment Report came in above the expected 215,000 job gains at 216,000.
Romney Appears the Ohio Winner; Santorum Strong
Apple Pinches Rivals, Unveils Newest iPad
Spain Lags Italy as Growth Concern Halts Rally
Refinancing Fees Are Reduced for Some F.H.A. Borrowers
German Manufacturing Stumbles
Stocks have rallied strongly and exceeded the 2011 high on SPY as forecast. It is not surprising to see overbought readings on some indicators as this occurs. Last November, we forecast a test of 1400 – 1430 on SPX, and stocks are close enough to this area that a correction could occur at any time, but we still expect to see a test of the low 1400’s.
The S&P broke through its 2012 uptrend line yesterday on increasing volume following weakness overseas. Up to this point, the U.S. indices have largely been able to shake off weakness in Europe and Asia, but yesterday saw broad weakness as the S&P made it back to its 20 DMA.
Displaying even more relative weakness are the small-caps as measured by the Russell 2000. After scant gains in February, the weakness has carried into March as the index rounds to the downside, unable to eclipse its 2011 highs:
Further signs of weakness can be found in the Advance/Decline line shifting lower, with fewer advancers on the latest highs and decliners outpacing advancing stocks over the last few weeks:
As we pointed out last week, the market was showing signs of weakness and we saw evidence of that yesterday and it seems to be following through this morning. The struggles in Europe is leading to weakness in trading today, following further weakness in Asia overnight. Right now, the futures are set to open down over .60% on the S&P.
Automakers Prepare for Deeper Europe Slump
China Plans Tax Cuts to Spur Consumption
Bank of Japan Likely to Extend Lending Effort
China’s Stocks Slump Most in a Month on Slowing Growth Concern
Included in the March 2012 FinTech Newsletter:
- Argus Research – Market Digest for March 5th, 2012 - Economic Calendar for March 2012 - Zacks Articles: Aggressive Growth –Kirby Corporation (KEX), Growth and Income – Chesapeake Midstream Partners, L.P. (CHKM), and Value Stock – Kennemetal (KMT). - Notes from the Fred Report: Weekly Report for March 5th, 2012
U.S. stock futures have pushed off their overnight/morning lows despite the news of China's cut to its GDP target and European weakness following this announcement. Despite this rally off the lows, the recent underperformance of U.S. small caps may make some investors pause. The Russell 2000 finished last week near its February lows, underperforming the other major indices.
China Cuts GDP Target to 7.5% as Exports Slow
Stocks Cheaper Than Any U.S. Peak in 23 Years
Natural Gas to Power Pickups
AIG to Sell $6 Billion In Asian Insurer's Stock
*Change in Rating: Allstate Corp.: Strong 4Q; raising to BUY with target of $36 (John Eade)
*UtilityScope: DTE Energy Co.: Solid EPS and strong cash flow growth (Gary Hovis)
NEW IDEAS:
Longs Strongest Groups Improving • Apparel FOSL • Oil & Gas Storage WES
Breakout Report • none
Top Ten Groups • Automobile Manufacturing TSLA
Shorts Weakest Groups Breaking down • none Former 2s • none High Institutional Ownership • none
UPDATE ON OPEN IDEAS: Longs: Close: ALKS HLX Shorts: Cover: none
Futures are down following weakness in Europe, the Euro, and crude oil. In Europe right now the FTSE is -0.2%, the DAX -0.3%, and the CAC -0.1%. There are no major economic releases today but the spike in crude to above $110 (on false rumors of a Saudi pipeline explosion) seemed to be the catalyst for a late-day selloff in the U.S. Many stocks and commodities seem to be trading largely on technicals which may be signaling a short-term top.
Yelp Prices Its Offering at $15 a Share
Dollar Climbs to 9-month High Versus Yen
Crude Futures Fall After Blast Denied
Futures are bid this morning as Europe has strong gains going into the U.S. open. There was little reaction to the 8:30 Initial Claims which were better than expected and Personal Incom numbers which were short of expectations.
Some of the top stories this morning:
U.S. Spending, Incomes Rise
China’s Holdings of Treasuries Dropped in ’11
Spanish Bond Yields Fall in Debt Auction After ECB
Foreclosure Homes Hit 24% of U.S. Purchases
There is a lot of data coming out today including vehicle sales, ISM Manufacturing Index (exp.: 54.6), and Construction Spending (exp.: +1.0%).
U.S. stock futures are up a few points in the pre-market after strength in Europe and an upward revision to U.S. Q4 2011 GDP. Chicago PMI comes out at 9:45 (expectations of 61) and the Beige Book will be released at 2:00. Also scheduled for today is Ben Bernanke's semiannual report to the House Financial Services committee at 10:00 and speeches by Fed Presidents Plosser and Fisher.
Big stories this morning:
U.S. Economy Expands at a 3% Annual Pace, Greater Than Economists Forecast
Euro-Area Banks Tap ECB for Record Amount
Romney Wins in Michigan, Arizona
Costco's Profit Rises 13%
Mortgage purchase applications jumped last week: MBA
This report is a sector review for small cap sectors, which could be a strong addition to portfolios in 2012. The genesis of this report was requests from clients for small cap stock names. We believe taking a sector approach to these stocks is the best way to look at this question. This report should be read in conjunction with our last Sector Review. That report is available on the website, or email me and we will get a copy to you.
Following the worse than expected Durable Goods number, futures have returned to the flat line after trading up .3%. Stocks in Asia rose and trading in Europe is holding gains while gold and bonds have a held a bid througout the morning.
Durable Goods Orders in U.S. Slump 4%, Most in Three Years
GM Set to Take Stake in Peugeot
For the Costliest Homes, Foreclosure Comes Slowly
S&P says Greece default may be short
The_Fred_Report_Weekly_Report_022712.pdf
Futures are down half of one percent this morning following weakness in Europe. Crude oil and gold are also falling this morning.
Lowe’s Profit Tops Analysts’ Estimates
Sprint Deal for MetroPCS Said to Have Collapsed
Transocean Reports $6.12 Billion Fourth-Quarter Loss on Charge
Germany’s Crisis Role Under Pressure as G-20 Rebuffs Call to Help Europe
Other interesting links:
Warren Buffet's 2011 letter to Berkshire Hathaway Shareholders
Trailing European Profits Don’t Dull Stock Rally
For those interested in the Facebook IPO, this interview with of Mark Zuckerberg and Sheryl Sandberg by Charlie Rose is, well, interesting. The company does not seem focused on diversifying at this point (read: no plans for a search engine) and is very adamant about people sharing links, videos, music, etc. over their platform as being the "next step in the web's evolution."
*Change in Rating: American Campus Communities Inc.: Raising to BUY on strong fundamentals (John Eade)
*Focus List: Boston Properties Inc.: Solid outlook for leading office REIT (John Eade)
*Growth Stock: Activision Blizzard Inc.: Raises dividend as margins expand (Joseph Bonner)
*Growth Stock: Danaher Corp.: Strong outlook for 2012 (Nathaniel Gabriel)
*Value Stoc k: Public Storage Inc.: Growth trends on track (John Eade)
*Value Stock: Vulcan Materials Co.: Loss narrows in 4Q11 (Bill Selesky)
*UtilityScope: American Electric Power Co. Inc.: Ohio regulatory order leads to some concern (Gary Hovis)
*UtilityScope: CMS Energy Corp.: Strong 2011; raising target price to $26 (Gary Hovis)
U.S. stock futures are up slightly this morning, following modest gains in Asia. Some earnings news has been the catalyst for movements in a few stocks, of note:
J.C. Penney Posts Fourth-Quarter Loss on Restructuring Charges
AIG Profit Surges on Tax Benefit
Salesforce's 4Q, Outlook Lifts Stock 10 Percent
New Home Sales data is due out at 10:00 a.m. EST with consensus estimates coming in around 315,000 units. With higher employment and steady low rates, the chances are good for a rise above December's 307,000 units.
February final Consumer Sentiment will come out just before New Home Sales at 9:55. Consensus estimates are at 73.00 after the earlier 72.5 reading.
Erlanger has released its latest weekly chart book and of note are new additions to the long ideas list. Among the new long ideas are:
Longs Strongest Groups Improving • Health Care Technology MRGE • Oil & Gas Equipment HLX
Breakout Report • LFC
Top Ten Groups • Autos GM
FRED Report Midweek Update - February 23, 2012
The DAX has been lagging the FTSE and U.S. stock futures this morning, now down about .40%. Meanwhile, ES is up about 1.70 points above fair value. At 8:30, we learned that initial jobless claims held steady at 351,000, better than an expected rise of 7,000.
News stories of note this morning:
Sears to Sell 11 Stores, Separate Businesses
From the "you don't say" files, Euro zone economy to shrink in 2012
H-P Forecast Misses Estimates Amid Slump
Kohl's Profit Falls 7.9% Amid Sales Decline
RBS, Commerzbank, Credit Agricole Take Greek Hit After Deal
World Bank and Chinese Officials Push For New Reforms in China
Yesterday the S&P 500 hit a high of 1367 before retreating and finising down on the day. Looking at the trendlines, the index is consolidating at the top of its narrowing range and RSI has been above 70 for much of February.
With decreasing volume and recent underperformance from the Russell 2000, a correction to the low 1300s may not be out of the question. With that in mind, the uptrend we have seen since late November will look attractive to all those interested in buying the pullback.
U.S. stock futures are down about .25% right now following weakness in Europe. Also down the morning are the EURUSD and gold. As earnings reports are winding down and the week is light on economic releases, the light volume may pull the market in any direction. Some of the big news stories of the morning:
Previously Owned Home Sales Probably Up in January
Euro-Area Manufacturing, Services Contract
J&J CEO Weldon Is Out
Dell shares sink in premarket trade after results
Obama Readies Plan to Cut Corporate Tax Rate
U.S. Futures are up a bit at 9:00 a.m. while European indices are trading down. Friday saw a close on the S&P at its highest level since spring of 2011 and is less than one percent away from that level.
Greek Rescue Leaves Europe Default Risk Alive
Home Depot Beats on Top and Bottom Lines
Blankfein out as Goldman Sachs CEO by summer?
Wal-Mart Profit Falls 15%
This morning we saw earnings from Home Depot and Wal-Mart and will have a slew of retail earnings in the coming weeks. Below is a table with each company's report date and their EPS estimates (from Capital IQ):
Futures are slightly down this morning, perhaps due in part to Moody's saying they will put some U.S. banks up for review. This has pushed bonds up, dropping the yield on the 10-year note to a new low for the week. Notable weakness this morning: MS (-1.58%), AMZN (-2.97%), GLD (-1.18%), and NILE (-23.7%).
Housing Starts in U.S. Rise More Than Estimated on Warmer January Weather
Jobless Claims in U.S. Unexpectedly Decrease to Four-Year Low
Nestle Sales Beat Hopes but Tough Year Expected
GM Earns Record $9.19 Billion Net Income
Growth in the 17 countries that make up the euro zone fell 0.3 percent, Eurostat, the European statistics agency said Wednesday.
Manufacturing in the New York region expanded in February at the fastest pace since June 2010, a sign factories are propelling the expansion.
Kellogg Co. (K) agreed to acquire Procter & Gamble Co.’s Pringles potato chip business for about $2.7 billion in cash to bolster its snacks offerings after a deal with Diamond Foods Inc. (DMND) fell through.
List of 227 equities in Zacks #1 Rank Stocks along with the most recent additions to this list.
Zacks #1 Ranked Stocks
Recent Additions to Zacks #1 Rank List
February 6, 2012
February 13, 2012
With analysis of the financial markets and comments on Becton Dickinson & Co., Visa Inc., Alcatel-Lucent, Boeing Co., Energen Corp., LinkedIn Corp. and Dominion Resources Inc.
List of 230 equities in Zacks #1 Rank Stocks along with the most recent additions to this list
Argus Market Digest for Tuesday, January 17, 2012
With analysis of the financial markets and comments on Noble Corp., Polycom Inc., and PPL Corp.
View FinTech's January 2012 Newsletter
Included in the January 2012 FinTech Newsletter:
Erlanger Long and Short Squeeze Updates for January 9th and January 17th, 2012
Fred Report’s Weekly Report for January 17, 2012