Morning Report: May 2, 2011

Ahead of the Bell: Dow futures are trading up 70 points and S&P futures are trading up 6 points after Al Qaeda leader Osama bin Laden was killed by U.S. forces in Pakistan.  President Obama confirmed late last night that bin Laden was killed in a shootout in a compound in Abbotabad north of Islamabad.  The dollar and Treasuries rose and gold and other safe haven assets are down on the perception that geopolitical tensions are easing.  Crude oil is currently trading at about $111 a barrel.     

  • On the economic calendar today, the ISM-Mfg Index and construction spending reports will be out after the market opens.  Economist expect the ISM-Mfg index to fall to 58.5 from last month's 61.2 and construction spending is also expected fall to 0.5%.  Companies reporting earnings today include Chesapeake Energy, Con Edison, and Humana.   
  • Last week, Fed Chairman Ben Bernanke held his first news conference following the FOMC meeting and the markets rallied after the central bank said it will complete its $600 billion bond buyback program without any tapering.  Economic reports for the week were mixed with GDP coming in lower than forecasted at 1.8% annual rate in the first quarter of 2011 versus an estimate of 2%.  April was the best month of the year for the Dow and Nasdaq, the Dow finished up 4% and Nasdaq was up 3.3%, while the S&P 500 was up 2.8% for April.
  • The week ahead investors will be focusing on earnings season with some 100, or 20%, the S&P 500 companies  are due to report earnings this week.  According to Thomson Reuters, about 323 of the S&P 500 companies have reported earnings thus far, and 70% beat estimates. Companies reporting earnings this week include Pfizer, Archer Daniels, Kellogg, Prudential Financial, Fortune Brands, CVS Caremark, Cigna, Visa, and Berkshire Hathaway.  Traders will be watching the week's economic data which features the ISM manufacturing survey, monthly auto and chain stores sales.  However, traders will also be paying special attention to the monthly jobs report.  Economists are forecasting that about 190,000 jobs were added in April. The unemployment rate is expected to tick up to 8.9%.           
  • This day in History:  Osama bin Laden is dead.  Happy Monday, have a nice day.  

Friday’s Close

DJIA up 47.23 pts/+0.37%/12,810.54

S&P up 3.13 pts/+0.23%/1,363.61

Nasdaq up 1.01 pts/+0.04%/2,873.54

Monday’s Futures

Dow Futures up 70.00 pts/+0.54%

S&P Futures up 6.50 pts/+0.48%

Nasdaq Fut up 11.75 pts/+0.48%

Overseas Markets

FTSE +0.03%

CAC 40 +0.32%

NIKKEI 225 +1.57%

HANG SENG -0.36%

Overseas:  World stock markets were up today.  European markets are trading higher after the death of bin Laden. Asian markets were up on positive corporate earnings from the U.S.

Economic Reports:  Today ISM Mfg Index expected to be 59.5 & Construction Spending expected to be 0.5 @10:00 a.m., later in the week Motor Vehicle Sales, Factory Orders, ISM Non-Mfg Index, Jobless Claims, Productivity and Cost, Employment Situation, and Consumer Credit.   

Top Headlines:    

  • Arch Coal, Inc. (ACI) announced it is acquiring International Coal Group, Inc.(ICO) for $14.60 per share in an all-cash transaction valued at about $3.4 billion. 
  • Teva Pharmaceutical Industries Ltd. (TEVA) announced it is acquiring Cephalon, Inc. (CEPH) for $81.50 per share in cash or a total value of approximately $6.8 billion.
  • DuPont (DD) announced it is increasing its offer for Danishco by 4.3%. Danishco's board has recommended to shareholders to accept the improved offer from DuPont.
  • At Berkshire Hathaway’s Annual Meeting over the weekend, Warren Buffet spoke about business and the economy.  Although he expressed concern about debt levels in Europe, Buffet was positive about the US and stressed that Washington’s primary focus should be on job creation.  Other topics discussed at the meeting included:  the impact of Japan’s earthquake and tsunami, as well as other recent natural disasters, on Berkshire’s reinsurance business, succession plans in place at Berkshire and the possibility of a Berkshire dividend being issued sometime in the future.  Buffet also addressed the situation where former Berskshire executive David Sokel bought shares of Lubrizol prior to pitching it to Buffet for an acquisition.  


Gold:down $7.72 to $1,556.85

Oil:down $2.15 to $111.78

EUR/USD 1.4837 +0.0033

USD/JPY 81.4650  +0.2350

GBP/USD 1.6687 -0.0020

Volatility Index (VIX): As of the close of business Friday, April 29, the VIX is up 0.13 pts to 14.75

Companies Reporting Quarterly Earnings:   

Loews Corp (L): Q1 EPS of $0.92 beats by $0.01. Revenue of $3.66B (-1.2% Y/Y) beats by $0.05B.

DISH Network (DISH): Q1 EPS of $1.22 beats by $0.54. Revenue of $3.22B (+5.2% Y/Y) misses by $0.01B.

Humana (HUM): Q1 EPS of $1.86 in-line. Revenue of $9.19B (+9.7% Y/Y) beats by $0.05B.

Today’s Opening and Closing Bells:

Lyondell Basell Visits the NYSE To Celebrate Recent NYSE Listing, Hold Earnings Call Chief Executive Officer Jim Gallogly will ring the opening bell.  

Marvel’s Iconic Super Hero The Mighty Thor Joins Marvel Entertainment Executives to ring the closing bell.