Markets Higher, Closing News 6/16/11

Markets closed higher, and even though they were off the day’s highs, it’s hard to complain about a day that finished in the green after futures this morning pointed to what looked like another ugly day. A good Jobless Claims and New Housing Starts number was able to outweigh a sobering report from the Philly Fed, pushing the Dow 64 points higher on the day.

Jobless Claims fell more than expected to 414k last week, while economists were expecting the reading to come in at 420k. The jobs report gave investors some optimism that the labor situation is improving, and we could see claims fall below 400k in the coming weeks.

Also boosting the markets was the increase in US May Housing Starts, up 19k to 560k in May vs. 541k in April. Groundbreaking on homes was up 3.5% in May after falling almost 9% in April. While the number was certainly taken as a positive, there is still some concern for the overall recovery in the housing market because of the number of vacant houses, which drive demand for new starts lower, and the rise in multi-family houses, reflecting peoples’ preference to rent rather than own.

Conflicting with the decrease in Jobless Claims and the increase in Housing Starts, the Philadelphia Fed released a report signaling a negative outlook on the economic recovery. The Philly Fed reported that its employment index fell to its lowest reading since October 2010, registering at 4.1 vs. 22.1 in May, and new orders was -7.6 vs. +3.9 in May, the lowest reading since June 2009.

The Euro traded 0.39% higher today as concerns about the Greek bailout persisted, and the protests in Athens continued for a second day. The Greek Prime Minister worked today to restructure the government and to try and get austerity measures approved to ensure the bailout funds will be received.

When David Einhorn agreed to purchase a 33% stake in the Mets last month for $200 million, many people wondered why he would take a minority stake in the team. However, reports surfaced last night that should the team not be able to return Einhorn’s $200 million investment inside three years there is a clause that allows Einhorn to purchase the Mets for one dollar…I think David might have some loose change laying around to complete the deal.

Market Indices/Statistics:

  • Dow closed up 64.25 pts/+0.54% to 1,1961.52
  • S&P closed up 2.22 pts /+0.18% to 1,267.64
  • Nasdaq closed down 7.76 pts/-0.29% to 2,623.70
  • 25 of the 30 Dow stocks closed higher / 5 closed lower
  • 7 of the 10 of the S&P 500 sectors closed higher
  • Consumer Staples was the best performing sector (up 0.79%)
  • Materials was the worst performing sector for the second day (down 0.94%)
  • The VIX is up 1.41 pts to 22.73
  • Oil is up $0.15 to $95.41
  • Nat Gas is down $0.142 to $4.493
  • Gold is up $3.30 to $1,529.50
  • Euro vs. Dollar up $0.0054 to $1.4212
  • Dollar vs. Yen down $0.35 to $80.63

Companies in the News:

Congratulations to “The Knot” for announcing their transfer to the NYSE. They are scheduled to begin trading on the Big Board as XO Group Inc. (NYSE: XOXO) on June 28th.

Energy Transfer Equity, L.P. announced it has reached an agreement to acquire Southern Union Company for $7.9 billion or $33.00 per share. Shares of both ETE (+8.22% to $45.96) and SUG (+17.52% to $33.21) traded higher on the day.

Discover Financial Services traded higher today (+1.39% to $23.27) after announcing that its Board of Directors has announced a $1 billion share buyback program.

Earnings:

Kroger shares traded higher (+4.53% to $23.99) after reporting Q1 earnings per share of $0.70, ahead of the $0.64 per share that analysts were expecting, on revenue of $27.5 billion, also beating expectation. KR also announced it expects FY revenue to be $1.85-1.95, in line with consensus of $1.91.

Actuant Corp. also closed higher (+5.48% to $24.07) after reporting Q3 results before the bell this morning. ATU reported Q3 earnings per share of $0.51 on revenue of $393 million vs. estimates of $0.46 per share and $379 million in revenue. Also driving shares higher was an improved FY outlook, now $1.60-1.65 from $1.50-1.60 and ahead of $1.57 expected by analysts.

Smithfield Foods announced Q4 earnings per share of $0.85 excluding items, on sales of $3.1 billion vs. the $0.82 per share and $3.23 billion that analysts were expecting. Shares were also pushed higher by the announcement that the Board of Directors has approved a $150 million share repurchase program. Shares of SFD traded higher (+6.42% to $21.70) on the day.

Pier 1 Imports Inc. slid today (-4.20% to $10.71) after reporting Q1 earnings ($0.12 per share on $334 million in revenue) that were in-line.

Coming Friday:

Economic Reports: University of Michigan Confidence Index (expected to be 73.5) at 9:55 am