Morning Report: December 22, 2011

Ahead of the Bell: Dow futures are trading up 68 points and S&P futures are trading up 7 points. Traders are winding down for the year, so volume is expected to be light, but the threat of a mass credit rating downgrade for the euro zone countries still hangs over the equity markets. Investors are encouraged that economic data due today may signal the US economy is recovering. Resource related stocks will be in focus, as copper climbed for a third day in a row.

  • On the economic calendar today, the Commerce Department will release a second reading for third quarter GDP before the market opens, and is expected to be 2.0%, in line with previous estimates. The Labor Department will release its Weekly Initial Jobless claims before the market opens, and is expected to be 380K, compared with 366K for the previous week. The Reuter's/University of Michigan's consumer sentiment index for mid-December will be out after the market opens, and is expected to be 68.00 versus 67.6. The FHFA House Price Index for October and Leading Indicators for November will also be out after the market opens and both are anticipated to be 0.3%, versus 0.9% for the previous months, respectively. The dollar is down against the major currencies. Crude oil is currently trading at $99 a barrel. Gold is trading at $1,612.  
  • Yesterday, technology shares slumped after Oracle reported results that were lower than expectations and cast doubts on the sector's health, as broader markets closed mostly flat in a light volume traded session.    
  • On CNBC today, Jeremy Siegel, Professor of Finance at the Wharton School of the University of Pennsylvania, talked about the financial markets and Europe. Siegel said stocks are very cheap right now because of low interest rates and low multiples. If it wasn’t for Europe, he believes the stock market would be 20-25% higher. Everyone seems to be waiting to see if Europe will turn into a Lehman situation, but Siegel doesn’t think the EU will allow that to happen. The draining of funds from the banking system seems to be adding to the debt crisis and Siegel believes the ECB needs to reign in the euro, which will help with the periphery countries.          
  • Happy Thursday, have a nice day.  

Wednesday’s Close

DJIA up 4.16 pts/+0.03%/12,107.74

S&P up 2.42 pts/+0.19/1,243.17

Nasdaq down 25.76 pts/-0.99/2,577.97

Thursday’s Futures

Dow Futures up 68.00 pts/+0.60%

S&P Futures up 7.40 pts/+0.56%

Nasdaq Fut up 13.58 pts/+0.58%

Overseas Markets

FTSE +1.25%

CAC 40 +1.38%

NIKKEI 225 -0.77%

HANG SENG +0.21%

Overseas:  World stock markets were up today. European markets are up after the ECB provided more funding for European banks. Asian markets were down on uncertainty in North Korean leadership.

Economic Reports:  GDP expected to be 2.0% & Jobless Claims expected to be 380K at 8:30 a.m., Consumer Sentiment expected to be 68.0 at 9:55 a.m., FHFA House Price Index expected to be 0.3%, and Leading Indicators expected to be 0.3% at 10:00 a.m.

Top Headlines:    

  • Bank of America (BAC) agreed to pay $335 million to settle allegations that its Countrywide Financial division engaged in discriminatory practices with minority borrowers.
  • Reports indicate Yahoo Inc (YHOO)  is consider slashing its stakes in China's Alibaba Group and a Japanese affiliate in a deal worth roughly $17 billion.    
  • Reports indicate activist investment fund, Starboard Value, has taken a 4.5% stake in AOL Inc., and is pushing for a meeting with the CEO and the board to address what it sees as strategic failings. 
  • Fortress Investment Group (FIG) said CEO, Daniel Mudd will take a leave of absence after he was named by the SEC as a defendant in a civil securities-fraud lawsuit.

Commodities/Currency:

Gold:up $9.10 to $1,612.85

Oil:up $0.36 to $99.03

EUR/USD 1.3066 +0.0020

USD/JPY 78.0800  +0.0400

GBP/USD 1.5689 +0.0015

Volatility Index (VIX): As of the close of business Wednesday, December 21, the VIX is up 1.79 at 21.43

Companies Reporting Quarterly Earnings:     

None as of yet.

Today’s Opening and Closing Bells:

FedEx Corp. Visits the NYSE to Mark the Last Day to Ship in Time for Christmas Frontline Workers Recognized will ring the opening bell.

The Make-A-Wish Foundation of Connecticut child Katherine Mara, joined by legendary musician, Jose Feliciano and family and friends of Make-A-Wish will ring the closing bell.

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