Morning Report: April 25, 2011

Ahead of the Bell: Dow futures are trading up 33 points and S&P futures are trading up 3 points. Crude oil and commodity prices are trading higher after violence erupted in Syria and Yemen over the weekend, gold and silver are also trading higher.  Crude oil is currently trading about $112 a barrel.  Traders are also anticipating China may raise interest rates again to fight inflation.     



  • On the economic calendar today, new home sales will be out after the opening.  The index is expected to have risen to 280,000 units, up from 250,000 the previous month.  Companies reporting earnings include Johnson Controls and Kimberly-Clark.  The dollar is up against the euro and Japanese yen and down against the British pound.   The Australian dollar has touched a 29-year high.  Trading is expected to be light today as stock markets in London, Australia, and Hong Kong are closed for the holidays.

  • Last week, the markets responded to strong corporate earnings with the Dow closing at an almost 3-year high, the S&P 500 closed just shy of new highs led by tech, materials, and energy stocks.  For the week, the Dow and S&P were up 1.3% and Nasdaq rose 2%. At the beginning of the week, ratings agency Standard & Poor’s warned it might downgrade U.S. government debt saying there is a one-in-three chance the rating could slip by one notch.  On Friday, the government reported new claims for unemployment benefits fell for the previous week. Commodities traded higher including gold, silver, and crude oil.  For the week crude was up over 2%.  

  • The week ahead, first quarter earnings season continues.  According to CNBC, so far, about 75% of the companies reporting have beat earnings estimates. This week, 180 S&P 500 companies are due to report earnings including: ExxonMobil, Coca-Cola, Caterpillar, Norfolk Southern, Amazon.com. Also, there will be a slew of economic data this week and traders will be focusing on GDP data which is expected to show the economy grew at a slower pace than expected at 2% or less.  The FOMC will begin its two day meeting on Tuesday and concludes on Wednesday afternoon followed by an announcement.   Federal Reserve Chairman Ben Bernanke will hold his first ever press conference after the meeting concludes.  

  • On CNBC today, Barry Knapp, Head of U.S. Equity Strategy at Barclays Capital, talked about sectors in the market that have good margins.  Knapp said the margins in the industrial sector have top line growth right now and it’s a key positive for this market.  Knapp said current high prices for crude oil that have shocked the market are temporary and will not impact vehicle  purchases.  Knapp went on to say the equity markets are prepared for a lower GDP and traders will be focusing on the exit strategy for when QE2 ends.

  • Also, on CNBC today, Edward Yardeni, President & Chief Investment Strategist of Yardeni Research, talked about the Fed and QE2.  Yardeni said profitable companies drive the economy as profitable companies hire employees.  Yardeni expects GDP to be lower, about 2% as many manufacturing companies are struggling to get supplies.  Yardeni pointed out that markets in the last few weeks have been driven by earnings.  Yardeni believes QE2 will end in June but it will be the beginning of QE2.5.     

  • Animated movie, Rio tops the box office for a second-straight weekend, Happy Monday, have a nice day.  

Friday’s Close


DJIA up 52.45 pts/+0.42%/12,505.99


S&P up 7.02 pts/+0.53%/1,337.38


Nasdaq up 17.65 pts/+0.63%/2,820.16


 


Monday’s Futures


Dow Futures up 33.00 pts/+0.27%


S&P Futures up 3.40 pts/+0.26%


Nasdaq Fut up 6.50 pts/+0.27%


 


Overseas Markets


FTSE -0.07%


CAC 40 +0.43%


NIKKEI 225 -0.11%


HANG SENG +1.01%


 


Overseas:  World stock markets were lower today.  Asian markets were lower on some disappointing corporate results.  European markets are also trading lower in anticipation of China raising interest again.


 


Economic Reports:  Today New Home Sales, later in the week Consumer Confidence, Durable Goods Orders, FOMC Meeting Announcement, GDP, Jobless Claims, Personal Income and Outlays, Chicago PMI, and Consumer Sentiment.   


 


Top Headlines:    


 



  • Barrick Gold (ABX) announced it is acquiring Equinox Minerals Ltd. in an all-cash offer valued at C$8.15 per Equinox share in cash, or a total of about C$7.3 billion.

  • Bank of America (BAC) was dismissed from a lawsuit brought by investors who bought mortgage-backed securities sold by Countrywide Financial Corp.

  • Tenet Healthcare Corp's (THC) has rejected the $3.3 billion offer from Community Health Systems (CYH), saying the price undervalues the company.

  • Honda Motor Corp (HMC) says it will take about another year until the company will be able to restore production to its full capacity after the earthquake and Tsunami in Japan.

 Commodities/Currency:


Gold:up $10.33 to $1,516.85
Oil:up $0.38 to $112.67

EUR/USD 1.4592 +0.0026
USD/JPY 81.9550  +0.0850
GBP/USD 1.6527 +0.0030


 


Volatility Index (VIX): As of the close of business Thursday, April 21, the VIX is down 0.38 pts to 14.69


Companies Reporting Quarterly Earnings:   


Johnson Controls (JCI): FQ2 EPS of $0.56 beats by $0.01. Revenue of $10.14B (+22% Y/Y) beats by $1.07B.


Kimberly-Clark (KMB): Q1 EPS of $1.09 misses by $0.08. Revenue of $5.02B (+4% Y/Y) beats by $0.04B.


Today’s Opening and Closing Bells:


IQ Global Agribusiness Small Cap ETF (CROP) will ring the opening bell.  


US Gold Corporation (UXG) Visits the NYSE, Chairman and CEO Rob McEwen will ring the closing bell.


 


 


Paras Madho


NYSE Euronext


Market Watch and Corporation Actions


(212) 656- 5404