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Tuesday, May 3, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading down -15.70 points. The US stock market yesterday erased early gains triggered by news of the death of Osama Bin Laden and settled lower on concern global economic growth may slow: Dow Jones -0.02%, S&P 500 -0.18%, Nasdaq Composite -0.33%. The Dow and S&P 500 posted 2-3/4 year highs and the Nasdaq rose to a 10-year high, but all the indexes gave up their gains and finished lower.

                Bearish factors included (1) carry-over weakness from the fall in Chinese stocks after Apr China PMI manufacturing unexpectedly declined (-0.5 to 52.9 versus expectations of +0.5 to 53.9), which fuels concern the Chinese economy may slow and weaken the global economy as well, (2) concerns that the surge in gasoline prices to a 2-3/4 year high will crimp consumer spending and drag the overall economy lower as well, and (3) weakness in energy producers as crude prices fell.

   Bullish factors for stocks included (1) early strength in stocks on the news that Osama bin Laden was killed, which fueled speculation that the terror risk will get smaller for the US, (2) the smaller-than-expected decrease in the Apr ISM manufacturing index (-0.8 to 60.4 versus expectations of -1.6 to 59.6), (3) the larger-than-expected increase in Mar construction spending which rose at its fastest pace in 11 months (+1.4% versus expectations of +0.3%), and (4) increased M&A activity with 8,188 deals announced globally this year that total $823 billion, up +25% from the $657.4 billion in announced deals in the same period in 2010.


•   Andarko Petroleum (APC) fell 1% in European trading after its Q1 net income fell to $216 million from $716 million in the prior-year period.

Wednesday, May 4, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading down -1.70 points. The US stock market yesterday settled lower on profit taking along with weakness in retailers and energy and raw-material producers: Dow Jones 0.00%, S&P 500 -0.34%, Nasdaq Composite -0.78%.

                Bearish factors included (1) profit-taking after the S&P 500 had climbed to a 2-3/4 year high and was up over 8% this year through Monday, (2) weakness in retailers after Sears Holdings slumped when it reported declines in sales of apparel, appliances and consumer electronics, and (3) the drop in energy and raw-material producers after crude oil and gold retreated.

   Bullish factors for stocks included (1) the larger-than-expected increase in Mar factory orders along with the unexpected upward revision to Feb (Mar +3.0% versus expectations of +2.0% and Feb revised up to +0.7% from the originally reported -0.1%), and (2) reduced interest rate concerns as the yield on the 10-year T-note fell to a 1-1/2 month low of 3.246%.


•   Green Mountain Coffee Roasters (GMCR) surged 17% in European trading after the company raised its full-year profit forecast to as much as $1.50 a share, exceeding analysts' estimates of $1.23.


•   Las Vegas Sands (LVS) tumbled 8.9% in pre-market trading after the company late yesterday reported Q1 adjusted profit of 37 cents a share, below analysts' estimates of 44 cents a share.

Thursday, May 5, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading down -4.50 points. The US stock market yesterday settled lower as weaker-than-expected economic data dampened optimism about the health of the economy: Dow Jones -0.66%, S&P 500 -0.69%, Nasdaq Composite -0.47%. The S&P 500 fell to a 1-week low and the Nasdaq posted a 1-1/2 week low.

                Bearish factors included (1) the smaller-than-expected increase in the Apr ADP employment change (+179,000 versus expectations of +195,000), (2) the unexpected decline in the Apr ISM non-manufacturing index which matched its lowest level in 14 months (-4.5 to 52.8 versus expectations of +0.2 to 57.5), and (3) weakness in energy and raw-material producers after crude and metals prices plunged.

   Bullish factors for stocks included (1) reduced European sovereign-debt concerns after Portugal's government announced an agreement on a 78 billion-euro ($116 billion) 3-year loan package, (2) increased M&A activity after ConAgra said it offered to buy Ralcorp Holdings and Applied Materials offered to buy Varian Semiconductor Equipment Associates, and (3) the drop in the 10-year T-note yield to a 1-1/2 month low of 3.206%.


•   Con-Way (CNW) gained 3.2% in European trading after the trucking company reported Q1 net income of 12 cents a share, better than analysts' estimates of 4 cents.


•   Whole Foods (WFMI) rose 4.3% in European trading after the company boosted its full-year earnings projection to $1.90 a share in 2011 from an earlier estimate of $1.80 a share.


•   Freeport-McMoRan (FCX) fell 1.4% in pre-market trading after copper prices tumbled to a 5-month low.

Friday, May 6, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading up +3.80 points ahead of Apr nonfarm payrolls. The US stock market yesterday settled lower as an unexpected increase in weekly jobless claims offset a plunge in oil prices that fueled gains in consumer and transportation stocks: Dow Jones -0.66%, S&P 500 -0.69%, Nasdaq Composite -0.47%. The S&P 500 and Nasdaq both fell to 2-week lows while the Dow slipped to a 1-week low.

                Bearish factors included (1) the unexpected increase in weekly initial unemployment claims to an 8-1/2 month high (+43,000 to 474,000 versus expectations of -19,000 to 410,000), (2) comments from Atlanta Fed President Lockhart who said "there is virtually no net job creation resulting from new business formation in recent quarters," (3) weakness in energy and raw-material companies after dollar strength prompted a broad-based plunge in commodities, and (4) hawkish comments from Minneapolis Fed President Kocherlakota who said it would be &qu ot;desirable" to raise interest rates this year and that he would support a 50 bp increase in the Fed funds rate.

   Bullish factors for stocks included (1) reduced inflation concerns after the larger-than-expected increase in Q1 nonfarm productivity and the upward revision to Q4 (Q1 +1.6% versus expectations of +1.1% and Q4 revised up to +2.9% from the previously reported +2.6%), (2) strength in transportation and consumer companies after crude oil plunged to a 1-1/2 month low, and (3) comments from San Francisco Fed President Williams who said a period of high inflation is "very unlikely" because rising commodity prices spurred by global demand aren't likely to keep climbing.

Monday, May 9, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading up +6.20 points. The US stock market last Friday rallied sharply on the stronger-than-expected Apr nonfarm payrolls but then gave up most of their gains on speculation that Greece may leave the European Union: Dow Jones +0.43%, S&P 500 +0.38%, Nasdaq Composite +0.46%.

                Bullish factors for stocks included (1) the stronger-than-expected Apr nonfarm payrolls (+244,000 versus expectations of +185,000), (2) the larger-than-expected increase in Apr manufacturing payrolls (+29,000 versus expectations of +20,000), (3) the -1.1% decline in Q1 US bankruptcy filings, the third straight quarterly decline, and (4) reduced interest rate concerns after the 10-year T-note yield fell to a 5-month low of 3.129%.

   Bearish factors included (1) the unexpected increase in the Apr unemployment rate (+0.2 to 9.0% versus expectations of unchanged at 8.8%), (2) renewed European sovereign-debt concerns after Der Spiegel magazine reported that Greece is considering reintroducing its own currency and may leave the European monetary union, and (3) weakness in energy and raw material producers after dollar strength fueled further declines in commodities as copper plunged to a 5-1/4 month low and crude oil fell to a 2-1/4 month low.


•   US Steel (X) rose 1.4% in European trading after Barron's reported the steelmaker may rise as much as 65% over the next year if the company posts higher earnings and limits any decline in prices.

Tuesday, May 10, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading up +5.80 points. The US stock market yesterday settled modestly higher as gains in energy and raw material producers offset heightened European debt concerns after S&P cut Greece's credit rating: Dow Jones +0.36%, S&P 500 +0.45%, Nasdaq Composite +0.55%.

                Bullish factors for stocks included (1) strength in mining stocks and energy and raw-material producers after commodity prices rallied sharply, (2) data from the New York Fed that showed the Q1 delinquency rate on US households fell to 10.5%, down from 10.8% in Q4 and the fifth straight quarterly decline, and (3) strong company earnings results as 72% of the 421 S&P 500 companies that have reported earnings results since Apr 11 have beaten analysts' estimates.

   Bearish factors included (1) carry-over weakness from a slump in European stocks on increased sovereign-debt concerns after S&P cut Greece's credit rating 2 levels to B from BB- and said further reductions are possible, and (2) a drop in chipmakers after Wells Fargo said the inventory of semiconductor chips rose in Q1 and that memory prices continue to fall.


•   Microsoft (MSFT) rose 1% in European trading after people involved with the matter said Microsoft is in talks to buy Skype Technologies Sa in a deal valued at about $8.5 billion.

Wednesday, May 11, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading up +1.60 points. The US stock market yesterday finished with moderate gains on strong company earnings results and increased M&A activity: Dow Jones +0.60%, S&P 500 +0.81%, Nasdaq Composite +1.01%. The Nasdaq posted a 1-week high.

                Bullish factors for stocks included (1) carry-over support from a rally in European stocks on reduced European debt concerns after the Greek newspaper Kathimerini reported that the IMF is arranging a package of as much as 100 billion euros ($144 billion) to replace Greece's existing bailout, (2) carry-over support from a rally in Chinese stocks after Apr China exports climbed +29.9% to a record $156 billion, stronger than expectations and a sign that the global economic recovery may be sustained, (3) strong company earnings results as 72% of the 423 S&P 500 companies that have reported earnings results since Apr 11 have beaten analysts' estimates, and (4) increased M&A activity as th ere has been 8,744 deals announced globally this year totaling $883.63 billion, up +26% from the $699.13 billion in the same period in 2010.

   Bearish factors included (1) inflation concerns after the stronger-than-expected Apr import prices (+2.2% m/m and +11.1% y/y versus expectations of +1.8% m/m and +10.4% y/y), and (2) comments from Richmond Fed President Lacker who said US "home prices are likely to remain under pressure" and that many sectors of the economy remain in the "doldrums."


•   Johnson & Johnson (JNJ) rose 1.0% in European trading after Goldman Sachs raised its recommendation for the shares to "buy" from "neutral," predicting the company's earnings will grow 9 to 10% over the next 3 years from growth of 2 to 3% over the previous two.


•   Walt Disney (DIS) fell 2.6% in European trading after the company reported Q2 profit of 49 cents a share, below analysts' estimates of 58 cents.

Thursday, May 12, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading down -7.00 points. The US stock market yesterday moved steadily lower throughout the day and finished with large losses on concern that an acceleration of global inflation will lead to higher interest rates: Dow Jones -1.02%, S&P 500 -1.11%, Nasdaq Composite -0.93%.

                Bearish factors for stocks included (1) global inflation concerns after Apr China consumer prices rose more than expected, Apr German CPI was unexpectedly revised up to a 2-1/2 year high and the BOE said in its quarterly inflation report that inflation remains "uncomfortably high," (2) the larger than expected Mar US trade deficit which widened by the most in 9 months and is GDP negative (-$48.2 billion versus expectations of -$47.0 billion), (3) comments from Cleveland Fed President Pianalto who said the US labor market is still a "long way" from healthy, and (4) weakness in energy and commodity producers as a stronger dollar prompted a sel l-off in commodities.

   Bullish factors included (1) the action by Deutsche Bank AG to raise its 2011 profit estimates for S&P 500 companies to $99 a share, up from an earlier forecast of $96, and to hike its 2012 profit estimate to $106 a share from $102, citing Q1 profit margins and sales that have beaten estimates, and (2) comments from Atlanta Fed President Lockhart who said the economy shows signs of "improving quality" and that he expects 3%-4% GDP growth over the "next couple of years."


•   Cisco Systems (CSCO) fell 3% in pre-market trading after the company forecast profit and sales that may miss analysts' estimates and after CEO Chambers abandoned a 4-year old forecast for annual sales growth of 12% to 17% as weak demand forced him to cut jobs and exit businesses.

Friday, May 13, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading up +1.80 points. The US stock market yesterday recovered from early losses tied to China's hike in banks' reserve requirements and then moved higher the rest of the day as commodity producers rallied when the dollar weakened: Dow Jones +0.52%, S&P 500 +0.49%, Nasdaq Composite +0.63%.

                Bullish factors for stocks included (1) the as-expected Apr US retail sales (+0.5% and +0.6% less autos), along with the upward revision to Mar (+0.9% and +1.2% less autos versus the originally reported +0.4% and +0.8% less autos), (2) reduced European debt concerns after former ECB Vice President and current adviser to the Greek government, Lucas Papademos, said that Greece's exit from the EU was a "non-issue" and that the Greek asset privatization plan could ultimately exceed the announced 50 billion euros ($70.1 billion), and (3) strength in commodity producers after a decline in the dollar prompted a broad-based rally in commodit ies.

   Bearish factors included (1) inflation concerns after the larger-than-expected increase in Apr PPI (+0.8% m/m and +6.8% y/y versus expectations of +0.6% m/m and +6.5% y/y) with the +6.8% y/y increase the biggest in 2-1/2 years, (2) concern that the Chinese economy may slow and drag the global economy lower as well after the PBOC raised banks' reserve requirements for the fifth time this year to a record high 21%, and (3) concerns the Fed may soon reduce its record stimulus after Philadelphia Fed President Plosser said the US economic recovery is nearing a point where the Fed may start to tighten in the "not-too-distant future."

Monday, May 16, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading down -6.00 points. The US stock market last Friday moved lower after technology stocks retreated and bank stocks slid on concern over Europe's sovereign-debt crisis: Dow Jones -0.79%, S&P 500 -0.81%, Nasdaq Composite -1.20%.

                Bearish factors included (1) a sell-off in technology stocks after CA Inc., the second-largest maker of software for mainframe computers, tumbled after earnings missed estimates, (2) weakness in financial stocks on concern over the solvency of Greece and concerns that Republican efforts to change regulatory overhaul in the Dodd-Frank Act will reduce banks' earnings, and (3) concerns that Greece may need additional aid to avoid defaulting on its debt after the European Commission raised its estimate for Greece's budget deficit to 9.5% of GDP in 2011, higher than the 7.4% target adopted by the EU and the IMF in last years bailout.


                Bullish factors for stocks included (1) early support from a short-lived rally in European stocks after Q1 Euro-Zone GDP was stronger than expected, (2) the larger-than-expected increase in May US University of Michigan consumer confidence (+2.6 to 72.4 versus expectations of +0.2 to 70.0), and (3) the fall in the 10-year T-note yield to a 5-1/4 month low of 3.129%.


•   Alcoa (AA) slipped 1.5% in European trading as metals prices tumbled on concern the European debt crisis will slow demand.

Tuesday, May 17, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading up +2.90 points. The US stock market yesterday closed lower after weak economic data and increased concern over Europe's sovereign-debt crisis pressured prices: Dow Jones -0.38%, S&P 500 -0.62%, Nasdaq Composite -1.63%. The Dow fell to a 1-week low and the S&P 500 and the Nasdaq slumped to 3-week lows.

                Bearish factors included (1) carry-over weakness from a slide in European equity prices on concern the European sovereign-debt crisis may worsen as European leaders and the IMF met in Brussels to discuss additional aid to Greece, (2) the weaker-than-expected May Empire manufacturing index (-9.8 to 11.9 versus expectations of -1.7 to 20.0), and (3) the unexpected stagnation in the May NAHB housing market index (unchanged at 16 versus expectations of +1 to 17).

   Bullish factors for stocks included (1) strength in bank stocks after Fifth Third Bancorp rallied when Sandler O'Neill upgraded the company to "buy" from "hold," (2) the action by UBS to raise its 2011 earnings estimate for combined profit by companies in the S&P 500 to $101 a share from $96 and to $108 a share from $104 next year, citing better-than-forecast profit from energy and technology companies, and (3) a rally in raw-material producers as a weak dollar prompted a rebound in commodity prices.


•   Urban Outfitters (URBN) rose 1.1% in pre-market trading after the clothing retailer reported Q1 revenue of $524 million, higher than analysts' estimates of $522.5 million.


•   Hewlett-Packard (HPQ) slid 4% in European trading after CEO Apotheker told top executives that he's bracing for "another tough quarter" in the July period and urges deputies to "watch every penny and minimize all hiring."

Wednesday, May 18, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading up +2.90 points. The US stock market yesterday closed mixed after Hewlett-Packard cut its sales forecast and Apr US housing starts unexpectedly fell, which dampened economic optimism: Dow Jones -0.55%, S&P 500 -0.04%, Nasdaq Composite +0.03%. The Dow fell to a 3-1/2 week low and the S&P 500 and the Nasdaq slid to 4-week lows.

                Bearish factors included (1) weakness in technology stocks after Hewlett-Packard, the biggest personal-computer maker, slumped when it lowered its sales forecast and its CEO told top executives to brace for "another tough quarter," (2) the slide in homebuilders after the unexpected decline in Apr US housing starts and building permits (housing starts -10.6% to 523,000 versus expectations of +3.5% to 568,000 and building permits -4.0% to 551,000 versus expectations of +0.9% to 590,000), (3) the unexpected stalling in Apr industrial production (unchanged versus expectations of +0.4%), and (4) the unexpected decline in Apr capacity utilization (-0.1 to 76.9% versus expectations of +0.2 to 77.6%).

   Bullish factors for stocks included (1) reduced European sovereign-debt concerns after credit-default swaps to insure European government debt fell to a 5-week low, (2) a late-day rally in financial stocks after JPMorgan Chase CEO Dimon said that banks are increasing lending, and (3) the decline in the 10-year T-note yield to a 5-1/4 month low of 3.096%.


•   Dell (DELL) gained 5.8% in pre-market trading after the company late yesterday reported Q1 income of 49 cents a share, better than analysts' estimates of 43 cents and said it was able to withstand a slump in consumer demand by increased emphasis on business customers as it bolstered its expansion into corporate data centers.

Thursday, May 19, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading up +4.50 points. The US stock market yesterday finished higher after Dell reported robust quarterly earnings results and as energy and raw-material producers gained after commodities rallied: Dow Jones +0.65%, S&P 500 +0.88%, Nasdaq Composite +1.14%.

                Bullish factors for stocks included (1) a rally in technology stocks after Dell, the world's second-largest computer maker, reported better-than-expected earnings results, (2) strength in energy and raw-material producers as commodities climbed on signs of increased demand, (3) overall strong company earnings results as over two thirds of the 446 companies in the S&P 500 that have reported earnings since Apr 11 have topped analysts' estimates, and (4) the minutes of the Apr 26-27 FOMC meeting in which policy makers said that they have begun to coalesce on a strategy to reverse record monetary stimulus but that talks over an exit strategy don't mean that tightening "wo uld necessarily begin soon."

   Bearish factors included (1) the warning from Treasury Secretary Geithner who said budget deficits threaten to erode the US economy and security and that they can't be reduced with "magical thinking," (2) comments from ECB Executive Board member Stark who said a Greek debt restructuring "would create a catastrophe" because it would damage the banking system, and (3) hawkish comments from St. Louis Fed President Bullard who said "I still think it is reasonable" to expect Fed tightening by the end of the year.


•   PetSmart (PETM) rose 4.5% in pre-market trading after it reported Q1 profit of 61 cents a share, better than expectations of 55 cents.


•   Intel (INTC) slipped 2.2% in European trading after Goldman Sachs cut its recommendation on the stock to "sell" from "neutral," citing excess supply and increased competition from tablet computers.

Friday, May 20, 2011...

Overnight U.S. Stock News

•   June S&Ps this morning are trading down -4.00 points. The US stock market yesterday shook off losses from weaker-than-expected economic data on existing US home sales, leading indicators and manufacturing and closed higher as a bigger-than-forecast drop in weekly jobless claims bolstered optimism about the economy: Dow Jones +0.36%, S&P 500 +0.22%, Nasdaq Composite +0.30%.

                Bullish factors for stocks included (1) the larger-than-expected drop in weekly initial unemployment claims (-29,000 to 409,000 versus expectations of -14,000 to 420,000), (2) the action by Citigroup to revise up its global per-share earnings forecast for this year to +18% from a Sep forecast of +12%, citing stronger revenue growth and sustained margins, and (3) comments from St. Louis Fed President Bullard who said that declining inflation expectations have lessened the need to begin withdrawing record Fed stimulus.

   Bearish factors included (1) the unexpected decline in the May Philadelphia Fed manufacturing index which expanded at its slowest pace in 7 months (-14.6 to 3.9 versus expectations of +1.5 to 20.0), (2) the unexpected decline in Apr existing home sales (-0.8% to 5.05 million versus expectations of +2.0% to 5.20 million, (3) the unexpected decline in Apr leading indicators which fell for the first time in 10 months (-0.3% versus expectations of +0.1%), and (4) weakness in technology stocks after Goldman Sachs downgraded Intel, KLA-Tencor and Applied Materials, citing excess supply and increased competition from tablet computers.


•   Barnes & Noble (BKS) surged 25% in pre-market trading after Liberty Media offered to purchase the company for $17 a share.


•   The Gap (GPS) slumped 15% in European trading after the largest US apparel chain cut its full-year profit forecast by 22% as costs to make clothes rose faster than expected.

The American people should have elected a President "Not a Pretender!"

Stocks sink on worries about economic recovery
Stocks drop as business hiring and manufacturing lose momentum, adding to economic worries

Stan Choe and David K. Randall, AP Business Writers, On Wednesday June 1, 2011, 2:06 pm EDT
NEW YORK (AP) -- A sharp dive in private job growth and a continued slowdown in the manufacturing sector combined to send the Dow Jones industrial average down more than 200 points Wednesday, its biggest drop since early March. Treasury bond prices rose to their highest level of the year as traders placed a larger value on safer investments.

Doubts about the economy's strength that built throughout May were compounded by a pair of reports that were weaker than investors expected. The ISM's manufacturing index fell to 53.5 in May from 60.4 in April. It had been as high as 61.4 in February. Still, a reading of more than 50 indicates the manufacturing industry is growing.

And private employers added just 38,000 jobs in May, down from 177,000 in April, according to payroll processor ADP. Analysts had expected 180,000 new jobs. The Labor Department's more comprehensive report, which includes hiring by both private employers and the government, is released Friday.

"As far as we can tell, employers have hugely overreacted to the surge in oil prices, which has slowed but not killed consumption," said Ian Shepherdson, chief U.S. economist for High Frequency Economics. The weak ADP results pushed him to cut his forecast for overall job growth in May to 75,000. He earlier had forecast Friday's report to show growth of 175,000 jobs.

Stock losses came across the market, with all 10 industry groups that make up the Standard and Poor's 500 index losing ground. Companies that have benefitted from expectations of worldwide growth were especially hard hit. Caterpillar, Alcoa, and Boeing all lost more than 3 percent.

The Dow Jones industrial average dropped 211 points, or 1.7 percent, to 12,359. The S&P index lost 22, or 1.6 percent, to 1,323. The Nasdaq composite fell 41, or 1.5 percent, to 2,794.

The discouraging reports join a host of other news that has dampened hopes for a strong economic recovery and helped knock the S&P 500 down 1.4 percent in May. Still-high gas prices, a continued housing market decline, weaker-than-expected GDP and tepid consumer confidence -- along with concerns about debt problems in Europe and the debt ceiling in the U.S. -- have weighed on markets.

"It looks like this recovery has hit its second "soft patch," which for a recovery that is less than two years old is troubling," said Paul Ashworth, chief U.S. economist for Capital Economics.

The yield on the benchmark 10-year Treasury bond, which moves opposite its prices, sank to 2.96 percent.

Companies reporting results were not spared from the broad market drop. General Motors fell 3.3 percent after it said U.S. sales weakened in May. The car maker sold 221,192 vehicles, down 1.2 percent from a year earlier. It cited a decision to cut sales to rental car companies for the drop. Other auto manufacturers will give updates through the day on their U.S. sales. Analysts expect overall sales to be weaker due to supply problems in Japan following the March earthquake, among other factors.

Dollar General Corp. fell 7.5 percent after the discount store operator's first-quarter profit growth fell short of analysts' expectations. JoS. A. Bank Clothiers Inc. also reported first-quarter profit growth below analysts' expectations. The men's clothing maker fell 13 percent.