Morning Report: May 4, 2011

Ahead of the Bell: Dow futures are trading down 17 points and S&P futures are trading down 2 points following an agreement among Portugal, the IMF, and the European Union on a bailout package for the debt laden nation.  Portugal's caretaker President Jose Socrates, agreed to a three-year 78 billion euros bailout plan with the EU and IMF, subject to the opposition party's approval.  Also, commodities related companies will be in focus today as gold and silver are trading lower.  Reports indicate, silver is down 15 percent since last Friday. Crude oil is currently trading at about $110 a barrel.       

  • On the economic calendar today, ADP will release its April private sector employment report before the market opens and economists expect that the private sector created 200,000 jobs in April.  Also the Institute for Supply Management's will provide its report after the market opens and economists are forecasting a reading of 57.5.  Boston Federal Reserve Bank President Eric Rosengren will be speaking to the NAIOP commercial real estate development association in Boston.  San Francisco Federal Reserve Bank President John Williams will be speaking on maintaining price stability in a global economy, in Lost Angeles.  Atlanta Federal Reserve Bank President Dennis Lockhart will be speaking on the economic outlook to the National Funding Association in Atlanta.  Companies reporting earnings today include News Corp., Time Warner, Prudential Financial, Whole Foods, MetLife, and Electronic Arts.     
  • Yesterday, the markets closed down as gold, silver, and other commodities were lower, the dollar gained for a second straight day.
  • On CNBC today, Edward Lazear, Professor at Stanford University and former economic adviser to President George W. Bush talked about the deficit’s drag on the economy and what he considers a discouraging growth rate.  Lazear said he is seeing the same growth as last year, that the housing and labor markets are struggling and that this is not a typical recovery.  Historically when you come out of a recession, higher growth rates are expected than 3%. The recession in the 1980’s was comparable to this recession and we came out of that recession with a growth rate of about 7%.  Lazear went on to say he believes in JOLTS – jobs openings and labor turnover -  and pointed out that the lack in jobs pick up right now is due to a decline in layoffs.  Lastly, Lazear said investments have not taken off as much as he was anticipating and that if we don’t see growth, the jobs market will not pick up.       
  • Happy Wednesday, have a nice day.  

Tuesday’s Close

DJIA up 0.15 pts/+0.00%/12,807.51

S&P down 4.60 pts/-0.34%/1,356.62

Nasdaq down 22.46 pts/-0.78%/2,841.62

Wednesday’s Futures

Dow Futures down 17.00 pts/-0.10%

S&P Futures down 2.40 pts/-0.45%

Nasdaq Fut down 5.50 pts/-0.21%

Overseas Markets

FTSE -0.99%

CAC 40 -0.41%

NIKKEI 225 +1.57%

HANG SENG -1.35%

Overseas:  World stock markets were down today.  European markets are down on a possible bailout deal for Portugal. Asian markets were lower on concerns China might raise interest rates again and falling commodity prices.

Economic Reports:  ISM Non-Mfg Index is expected to be 57.0 @10:00 a.m.   

Top Headlines:    

  • ConAgra Foods (CAG) announced it is offering to acquire Ralcorp Holdings (RAH) for $86 per share in cash or about $4.9 billion plus the assumption of $2.5 billion in debt.
  • Applied Materials, Inc. (AMAT) announced it is acquiring Varian Semiconductor Equipment Associates, Inc. (VSEA) for $63 per share in cash or approximately $4.9 billion. 
  • Bloomberg reports Rio Tinto (RIO) will make a takeover offer for Alcoa Inc. (AA).  Rio Tinto has secured a syndicated loan it may use to make a bid for Alcoa for $25.50 a share.
  • Goldman Sachs Group Inc. (GS) was formally referred to the DOJ and the SEC by the Senate that Goldman entice clients to buy risky bond.
  • The DOJ has accused Deutsche Bank (DB) of misleading the agency about the quality of loans made by the company.  The DOJ is seeking about $1 billion in damages and losses on mortgages insured by the government.
  • MBA reports mortgage applications were up 4%.  The thirty-year fixed mortgage rate decreased to 4.76% from 4.8%.   

Commodities/Currency:

Gold:down $2.72 to $1,533.85

Oil:down $0.74 to $110.31



EUR/USD 1.4858 +0.0036

USD/JPY 81.1550  +0.1900

GBP/USD 1.6509 +0.0026

Volatility Index (VIX): As of the close of business Tuesday, May 3, the VIX is up 0.71 pts to 16.70

Companies Reporting Quarterly Earnings:   

AOL (AOL): Q1 EPS of $0.04 vs consensus of $0.19. Revenue of $551M (-17% Y/Y) beats by $15M.

Agrium (AGU): Q1 EPS of $1.03 beats by $0.11. Revenue of $2.95B (+59.8% Y/Y) beats by $0.61B.

Garmin (GRMN): Q1 EPS of $0.43 beats by $0.1. Revenue of $508M (+17.9% Y/Y) beats by $98M.

Marsh & McLennan Companies (MMC): Q1 EPS of $0.56 vs consensus of $0.56. Revenue of $2.88B (+9.4% Y/Y) beats by $0.06B.

TRW Automotive (TRW): Q1 EPS of $2.21 beats by $0.45. Revenue of $4.10B (+14.7% Y/Y) beats by $0.14B.

Time Warner (TWX): Q1 EPS of $0.58 beats by $0.02. Revenue of $6.68B (+5.7% Y/Y) beats by $0.24B.

R.R. Donnelley & Sons Company (RRD): Q1 EPS of $0.33 misses by $0.04. Revenue of $2.58B  (+7% Y/Y) in-line.

Quanta Services (PWR): Q1 EPS of -$0.08 misses by $0.12. Revenue of $849M (+13.5% Y/Y) beats by $48M.

Talisman Energy (TLM): Q1 EPS of $0.15 vs consensus of $0.25.

Quanta Services (PWR): Q1 EPS of -$0.08 misses by $0.12. Revenue of $849M (+13.5% Y/Y) beats by $48M.

Today’s Opening and Closing Bells:

Renren Inc. (RENN) Renren founder, Chairman and CEO Joseph Chen will ring the opening bell.

Parkinson’s Disease Foundation Visits the New York Stock Exchange Executive Director Robin Elliott will ring the closing bell.

 

 

Paras Madho

NYSE Euronext

Market Watch and Corporation Actions

(212) 656- 5404