Morning Report: May 31, 2011

Ahead of the Bell: Dow futures are trading up 102 points and S&P futures are trading up 12 points following reports that the EU is feverishly working on a draft proposal for Greece on a second bail-out package to provide loans and avert a default. Germany, which was against a second relief package for the debt laden country is considering concessions to assist the Euro zone. Also, traders will focus on resource related companies including gold, silver, and copper. Crude oil is currently trading at about $102 a barrel.

  • On the economic calendar today, Chicago Purchasing Managers index will be out after the market opens.  According to economists surveyed by Briefing.com, the Chicago PMI index is expected to fall to 62.5 from April's 67.6. Consumer sentiment data will also be out after the market opens and is expected to rise to 66.3 from 65.4. In addition, the S&P Case-Shiller home prices report will be and is expected to show that home prices fell 3.4% in March. The dollar is up against the euro and Japanese yen and down against the British pound.
  • Last week, the Dow and S&P were down on four weeks of losses for the month of May, the Dow is down 2.9% and the S&P is down 2.4%. The markets received disappointing housing, GDP, and initial jobless claims data during the week. The SEC approved a rule that will allow whistleblowers to receive compensation on fraud and other wrongdoing cases. The Group of Eight leaders concluded their meeting in France and agreed the economic recovery is gaining traction, although higher commodity prices are a concern.  Euro zone sovereign debt crisis continues to plague the financial markets. Moody's warned a Greek debt default would have wide implications on other EU countries including Italy. Other heavily indebted EU countries including Portugal, Ireland, and Spain.
  • The week ahead, investors will be focusing on the economy and jobs. The economic calendar is filled with note worthy reports, including construction spending, productivity and cost, factory orders, and ISM Non-Mfg Index. However, the most important report for the week will likely be the monthly jobs reports on Friday.  Economists are forecasting April non- farm payrolls to be 244,000. Some economists have cut their second half GDP forecast to 3 percent as a result of the Japanese supply chain disruption and higher energy prices. Traders will be watching as the Federal Reserve's QE2 program is expected to wind down in June.  Investor will be focusing on Europe where finance ministers continue to struggle for a resolution to the Greek debt crisis. 
  • On CNBC today, Mario Gabelli, Chairman & CIO of Gamco Investors Inc., talked about what industries to invest in. Gabelli said energy companies are very hot right now, however, he is moving away from oil companies and towards gas related companies, he likes water related and treatment companies. Gabelli prefers companies in  natural gas and favors wind and solar energy, the issue is how do you store the energy to use later. Gabelli also said he likes companies that are related to building and infrastructure. Gabelli went on to say we need to rid ourselves from dependency on Mideast oil, we need alternative and renewable energy, and address the fracking issue. Gabelli still believes in nuclear energy but the question is how do we make it safe in light of the nuclear crisis in Japan. 
  • The HANGOVER 2 was the top movie at the Box Office on Memorial Day Weekend, Happy Tuesday, have a nice day. 

Friday’s Close

DJIA up 38.82 pts/+0.31%/12,441.58

S&P up 5.41 pts/+0.41%/1,331.10

Nasdaq up 13.94 pts/+0.50%/2,796.86

Tuesday’s Futures

Dow Futures up 102 pts/+0.82%

S&P Futures up 12.50 pts/+0.92%

Nasdaq Fut up 23.75 pts/+1.01%

Overseas Markets

FTSE +0.96%

CAC 40 +1.58%

NIKKEI 225 +1.99%

HANG SENG +2.16%

Overseas:  World stock markets were up today.  European markets are up on optimism of a bail-out package for Greece.  Asian markets were up on predictions of strong industrial output in the coming months and a weaker Japanese yen.   

Economic Reports:  Chicago PMI expected to be 63 @9:45 a.m. & Consumer Confidence expected to be 66.5 @10:00a.m., Motor Vehicle Sales, ISM Mfg Index, Construction Spending, Jobless Claims, Productivity and Cost, Factory Orders, Fed Balance Sheet, Employment Situation, and ISM Non-Mfg Index.

Top Headlines:   

  • Ashland Inc. (ASH) announced it is acquiring privately held International Specialty Products Inc., a global specialty chemical manufacturer for approximately $3.2 billion.
  • Fortis Inc announced it is acquiring Central Vermont Public Service Corp (CV) for $470 million or $35.10 per share in cash for each share of CVPSC.
  • KKR announced it is acquiring Academy Sports for an undisclosed sum.  Academy Sports is one of the nation’s largest sporting goods and outdoor stores generating more than $2.7 billion in revenue in 2010.
  • Lockheed Martin (LMT) said it was the target of a hack but the Department of Homeland Security confirmed the attack was thwarted before any critical data was stolen.
  • The Chilean, Peruvian, and Colombian stock markets announced they are merging. The combined exchanges will have about 565 companies listed in the three bourses with a combined market capitalization of $691 billion, second to Brazil's bourse with $1.5 trillion.

Commodities/Currency:

Gold:down $0.10 to $1,537.85

Oil:up $1.62 to $102.58



EUR/USD 1.4399 +0.0112

USD/JPY 81.5850  +0.6300

GBP/USD 1.6498 +0.0025

Volatility Index (VIX): As of the close of business Friday, May 27, the VIX is up 1.67 pts to 17.19

Companies Reporting Quarterly Earnings:     

None as of yet.

Today’s Opening and Closing Bells:

RLJ Lodging Trust Visits the New York Stock Exchange RLJ Lodging Trust President and CEO Thomas J. Baltimore, Jr., and Chairman Robert J. Johnson will ring the opening bell. See our blog post.

Gilda’s Club New York City Visits the New York Stock Exchange Lily Safani will ring the closing bell. See our blog post.