Morning Report: December 6, 2011

Ahead of the Bell: Dow futures are trading down 5 points and S&P futures are trading up 3.30 points as investors remain focused on Friday’s meeting of Eurozone leaders. Markets look to have a muted reaction to the S&P announcement about the possible downgrades in Europe as it looks like German industry orders have offset (at least temporarily) investors’ concern.

  • There are no economic reports pending today, but German industry orders posted a surprise increase this morning, up 5.2% for October, outpacing forecasts for a 0.8% increase. The reading was the strongest increase since March 2010. The dollar is currently down against the Euro, British Pound, and Japanese Yen.  Crude oil is currently trading at about $101.03 per barrel. Gold is currently trading at $1,723.
  • S&P put 15 Euro zone countries on negative watch yesterday, meaning that it might downgrade their credit ratings by one or two notches within the next 90 days. Six of the 15 nations, including France and Germany, would be at risk of losing a triple-A rating.
  • U.S. Treasury Secretary Tim Geithner arrived in Germany this morning for three days of meetings with Euro zone leaders to work towards a plan ahead of Friday’s summit that will keep the European banks solvent.
  • Bond yields in the Spain and Italy continued their decline today, the 10-year Spanish yield fell to 5.116% and the 10-year Italian yield fell to 5.84%.
  • Robert Taubman, the Chairman, President and CEO of Taubman Centers Inc., appeared on CNBC to discuss what he is seeing this holiday season. Taubman said that both the luxury and discount retailers at his properties are reporting strength this season and are reporting strong sales. When asked what could pose a potential threat to retailers, Taubman commented that the rate that sales are growing is not sustainable long term, the last seven consecutive quarters have posted double digit gains, but it would take a major event to trigger a sharp decline.
  • Have a great day

Monday’s Close

DJIA up 78.41 pts /+0.65%/12,097.83

S&P up 12.80 pts/+1.03%/1,257.08

Nasdaq up 28.83 pts/+1.10%/2,655.76

Tuesday’s Futures

Dow Futures down 5 pts/-0.04%

S&P Futures up 3.30 pts/+0.26%

Nasdaq Futures up 10.25 pts/+0.43%

Overseas Markets

FTSE +0.21%

CAC 40 -0.23%

NIKKEI 225 -1.39%

HANG SENG -1.24%

Overseas:  World markets are mixed as investors react to both the S&P announcement as well as the economic reports from Germany this morning.

Economic Reports:  None

Top Headlines:    

  •  Merck & Co. announced it is developing a new MSD Research & Development headquarters in Beijing, marking a $1.5 billion investment.  The headquarters is expected to be completed in 2014.
  • Kraft announced the leadership for the new companies created from their pending spin-off.  Irene B. Rosenfeld will be Chairman and CEO of the global snacks company, W. Anthony (Tony) Vernon will become CEO of the North American grocery company, and John T. Cahill will become Non-Executive Chairman of the North American grocery company.
  • Starwood Hotels & Resorts Worldwide, Inc. has agreed to acquire a 49.8% stake in Design Hotels AG.  The amount paid was undisclosed, and the deal is expected to close in the first quarter of 2012.
  • The Wall Street Journal is reporting that Alpha Natural Resources has agreed to pay $200 million to settle on a range of civil and criminal charges stemming from the accident at a West Virginia coal mine that killed 29 miners in 2009. 

Commodities/Currency:

Gold:down $10.70 to $1,723.50

Oil:up $0.04 to $101.03

EUR/USD 1.3400 +0.0010

USD/JPY 77.71 -0.04

GBP/USD 1.5659 +0.00570

Volatility Index (VIX): As of the close of business Monday, December 5th, the VIX is up 0.13 to 27.65

Companies Reporting Quarterly Earnings:   

Autozone (AZO): 1Q EPS of $4.68 vs. estimates of $4.46.  Revenue of $1.92 billion vs. estimates of $1.89 billion

Today’s Opening and Closing Bells:

Joy Global Inc. (NYSE-Listed JOY), a worldwide leader in manufacturing, servicing and distributing equipment for surface mining, visits the NYSE to mark the company's transfer from NASDAQ to the NYSE.  Joy Global begins trading on the NYSE on December 6 under its new ticker symbol "JOY." In honor of the occasion, President & CEO Mike Sutherlin rings The Opening BellSM.

UIL Holdings Corporation (NYSE-Listed UIL) visits the NYSE to celebrate the 40th-year anniversary of its listing on the NYSE.In honor of the occasion, John Lahey, Non-Executive Chair of the Board of Directors, rings The Closing BellSM.