Morning Report: October 18, 2011

Ahead of the Bell: Dow futures are trading down 76 points and S&P futures are trading down 8 points after China reported 3Q growth fell slightly to 9.1% in July-September from a forecast of 9.2%.  Moody’s said it might place a negative rating on France amid concerns the cost of bailing Europe’s faltering economies is rising. German Finance Minister, Wolfgang Schaeuble said, even though European governments would adopt a plan to address the debt crisis, a definitive solution would not be reached at the European summit on October 23.

  • On economic calendar today, the Bureau of Labor Statistics will release August Producer Price Index before the market opens and expected to be 0.3%. The National Association of Home Builders will release the NAHB Housing Market Index after the market opens and is anticipated to be 15. Federal Reserve Chairman, Ben Bernanke will be speaking to Boston Fed Bank conference on the long term effects of the great recession. Atlanta Federal Reserve Bank President, Dennis Lockhart will be speaking on the economic outlook to the Chartered Financial Analysts Society of East Tennessee in Chattanooga. Companies reporting earnings include Bank of America, Coach, Coca-Cola, EMC Corp, State Street, and Whirlpool. The dollar is up against the major currencies.  Crude oil is currently trading at $86 a barrel.  Gold is trading at $1,658.   
  • Yesterday, stocks fell sharply after Germany dampened expectations for a fast resolution to Europe’s debt crisis, and a report showed Empire State manufacturing activity shrank more than forecasted.
  • On CNBC today, Bob Doll, Vice Chairman, Director, and Chief Investment Officer of Global Equities at BlackRock Advisors, LLC, talked about earnings, the economy, Europe, and Washington.  Doll does not see signs for a double dip recession, but we keep testing the bottom and are not out of the woods yet. With mixed results from the four big banks (Bank of America, JPMorgan, Morgan Stanley, and Citigroup), Doll sees a need for continued work on the balance sheets and while there are some positive signs, we have a long way to go.  He thinks Europe will continue to drive the markets and until something new happens for the US or Europe, we will continue to trade in a range.  Finally, Doll thinks the political scene in Washington spells trouble for the markets, it is bad and could get worst, and there is real risk to the downside with a cataclysm out of Europe.   
  • Happy Tuesday, have a nice day.  

Monday’s Close

DJIA down 247.49 pts/-2.13%/11,397.00

S&P down 23.72 pts/-1.94/1,200.86

Nasdaq down 52.93 pts/-1.98/2,614.92

Tuesday’s Futures

Dow Futures down 76.00 pts/-0.08%

S&P Futures down 8.50 pts/-0.21%

Nasdaq Fut down 4.58 pts/-0.19%

Overseas Markets

FTSE -1.14%

CAC 40 -1.60%

NIKKEI 225 -1.55%

HANG SENG -4.23%

Overseas:  World stock markets were down today. European and Asian markets were down after China reported slightly lower growth rate and Germany dampened expectations for a resolution for the Euro zone debt crisis.      

Economic Reports:  Producer Price Index expected to be 0.3% at 8:30 a.m. and Housing Market Index expected to be 15 at 10:00 a.m.

Top Headlines:    

  • Bloomberg reports China Eastern Airlines Corp. (CEA) in scrapping orders for Boeing Company (BA) 787 planes after delivery of its first plane was delayed until July.
  • Lowe's Companies Inc. (LOW) said it will close 20 underperforming stores in 15 states and cut 1,950 jobs in order to focus on more profitable locations.
  • Chevron (CVX) said it plans to start drilling its first gas exploration well off the southern coast of China before the end of the year, near an area where large gas reserves have been found.
  • Reports indicate Mattel (MAT) is in talks to buy a UK company, Hit Entertainment owner of the Thomas the Tank Engine children's toy and TV-show brand for about £500 million ($790.8 million).    

Commodities/Currency:

Gold:down $11.10 to $1,658.85

Oil:down 0.23 to $86.05

EUR/USD 1.3700 -0.0035

USD/JPY 76.6650  -0.1830

GBP/USD 1.5740 -0.0002

Volatility Index (VIX): As of the close of business Monday, October 17, the VIX is up 5.15 at 33.39

Companies Reporting Quarterly Earnings:     

Goldman Sachs (GS): Q3 EPS of -$0.84 misses by $0.68. Revenue of $3.59B (-60% Y/Y) misses by $1B.

Coca-Cola (KO): Q3 EPS of $1.03 beats by $0.01. Revenue of $12.25B (+45.4% Y/Y) beats by $230M.

Bank of America (BAC): Q3 EPS of $0.56 beats by $0.34. Revenue of $28.45B (+6.4% Y/Y) beats by $2.5B.

State Street (STT): Q3 EPS of $0.96 beats by $0.07. Revenue of $2.43B (+5% Y/Y) beats by $40M.

UnitedHealth (UNH): Q3 EPS of $1.17 beats by $0.05. Revenue of $25.3B (+6.8% Y/Y) misses by $150M.

Omnicom Group (OMC): Q3 EPS of $0.72 beats by $0.02. Revenue of $3.38B (+12.9% Y/Y) beats by $70M.

Omnicom Group (OMC): Q3 EPS of $0.72 beats by $0.02. Revenue of $3.38B (+12.9% Y/Y) beats by $70M.

Harley-Davidson (HOG): Q3 EPS of $0.78 beats by $0.02. Revenue of $1.23B (+13.4% Y/Y) misses by $60M.

EMC (EMC): Q3 EPS of $0.37 beats by $0.01. Revenue of $4.98B (+18.2% Y/Y) beats by $70M. Sees FY11 EPS of $1.48 and revenue to exceed $19.8B.

New Oriental Education & Tech (EDU): FQ1 EPS of $0.63 beats by $0.06. Revenue of $272M (+41.4% Y/Y) beats by $8.17M.

Check Point Software (CHKP): Q3 EPS of $0.72 beats by $0.03. Revenue of $308.3M (+12.8% Y/Y) beats by $1.25M.

Today’s Opening and Closing Bells:

Teucrium Trading, LLC visits the NYSE to celebrate the recent launch of three additional single commodity agricultural exchange traded products (ETPs) that trade on NYSE Arca. President and CIO will ring the opening bell.

Tyler Technologies Celebrates 45th Anniversary President and CEO John S. Marr Jr. will ring the closing bell.


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