Morning Report: September 1, 2011

Ahead of the Bell: Dow futures are trading up 42 points and S&P futures are trading up 5 points following the previous trading sessions gains, though stocks closed out the month of August as the worst month in about a year. Resource related companies will be in focus today. Commodities and key base metal stocks are trading lower, crude oil is currently trading about $88 a barrel and gold is trading at $1,831. President Obama plans to address Congress next Thursday in which he will unveiling his jobs proposal.

  • On the economic calendar today, the Labor Department will release its weekly initial jobless claims data before the market opens.  Economists are expecting claims to drop slightly to a reading of 408K claims from last week's 417K claims. The Commerce Department will release the Institute for Supply Management's August manufacturing index, as well as construction spending figures. Economists expect the August ISM index will fall to a reading of 47 from last month's 48.5, while construction spending figures are expected to increase 0.1%. Companies reporting earnings include Cascade Corp., Met-Pro Corp., Toronto-Dominion Bank, H&R Block Inc., and Quiksilver Inc. The dollar is up against British pound and Japanese yen and down against the euro.     
  • Yesterday, stocks were up on speculation the economy will keep expanding which overshadowed Economist Nouriel Roubini’s comments that he saw a 60 percent chance of a recession next year.
  • On CNBC today, Constance Hunter, Managing Director and Chief Economist at Aladdin Capital Management, talked about the Fed’s next move. Hunter believes the Fed should have done more and been ahead of the curve, but that the Fed will not do anything right now. The agency’s number one priority is to tackle the unemployment rate and the jobs component may force the central bank to act. Hunter pointed out, Chairman Bernanke has kicked the decision of additional stimulus back to a fiscal situation and Congress and the White House need to provide the necessary accommodative polices to create jobs.  Finally, she thinks Washington should address the recommendations in the Simpson-Bowles proposal.          Happy Thursday, have a nice day.   

Wednesday’s Close

DJIA up 53.58 pts/+0.46%/11,613.53

S&P up 5.97 pts/+0.49/1,218.89

Nasdaq up 3.35 pts/+0.13/2,579.46

Thursday’s Futures

Dow Futures down 42.00 pts/-0.36%

S&P Futures down 5.60 pts/-0.48%

Nasdaq Fut down 5.25 pts/-0.23%

Overseas Markets

FTSE -0.44%

CAC 40 -1.07%

NIKKEI 225 +1.18%

HANG SENG +0.25%

Overseas:  World stock markets were down today.  European markets are trading lower after three straight sessions of gains. Asian markets were lower on weak factory activity although China showed stronger domestic growth.      

Economic Reports:  Jobless Claims expected to be 407K and Productivity and Costs expected to be 0.5% & 2.6% at 8:30 a.m., ISM Mfg Index expected to be 48.5 & Construction Spending expected to be 0.1% at 10:00 a.m.

Top Headlines:

  • IBM announced it is acquiring Toronto-based Algorithmics for about $370 million, a risk analytics firm to boost its financial services capabilities.
  • Reports indicate three firms including Goldman Sachs (GS) and Ocwen Financial (OCN)  have agreed with NY State to end the practice known as robo-signing where employees sign foreclosure documents without reviewing the files.
  • The DOJ has filed a sued to block AT&T Inc.’s ( T ) proposed $39 billion acquisition of T-Mobile USA Inc., saying the deal would substantially lessen competition in the wireless market. AT&T plans to vigorously contest the action.
  • Bank of New York (BK) announced Robert Kelly, chairman and CEO has stepped down effective immediately.  Gerald Hassell, president and board member was named the new chairman and CEO.
  • Costco Wholesale (COST) announced it has appointed Chief Operating Officer Craig Jelinek to succeed Chief Executive Officer Jim Sinegal, who is stepping down January 1.

Commodities/Currency:

Gold:down $4.10 to $1,821.85

Oil:down $1.01 to $88.05

EUR/USD 1.4281 -0.0099

USD/JPY 77.0250  +0.3500

GBP/USD 1.6200 -0.0057

Volatility Index (VIX): As of the close of business Wednesday, August 31, the VIX is down 1.17 at 31.62

Companies Reporting Quarterly Earnings:     

Ciena (CIEN): FQ3 EPS of $0.08 beats by $0.17. Revenue of $435.3M (+11.7% Y/Y) misses by $8M. Sees 4Q revenue of $440M-460M, below consensus of $474.5M.

Today’s Opening and Closing Bells:

IRWIN Tools 2010 Ultimate Tradesman Challenge Winner Delwyn Thornton to Recognize National Tradesmen Day will ring the opening bell.

Newell Rubbermaid and its IRWIN Tools to celebrate National Tradesmen Day Celebrates 30 Years of trading on the NYSE, CEO John Figueroa, will ring the closing bell